Debt Management

Written by Michael McAlary

At the heart of debt management is the number of debts you have and the range of interest rates you are paying.

Are you overwhelmed by the number of credit cards and loans that you have, that take up your time each month in making sure the repayments are made? Direct debit authorisations have probably helped you but probably at the expense of you losing touch with the magnitude of your monthly loan commitments (out of sight, out of mind).

Are you confused that the monthly repayments seem to be inconsistent with the size of the loans/debts when you compare them? The reason for this lies in the different interest rates you are paying and the different frequencies in which the rates are being charged, across your debts.

The solution is better management through firstly analysing your debts on a total portfolio basis and secondly, using Debt Consolidation tools to help reduce your overall debt and monthly repayments.

What is Debt Consolidation?

 

Debt Consolidation is a financial strategy which can assist you in managing numerous debts, e.g. home loan, personal loans, credit cards, etc. and reducing your total debt. It can involve budgeting assistance, arrangement of debt consolidation loans and mortgage finance, informal creditor arrangements, personal insolvency agreements and bankruptcy assistance.

How will Debt Consolidation benefit me?

 

At the heart of debt consolidation is the interest rate you are paying for each debt. Banks and finance companies charge higher interest rates for debt that is unsecured .e.g. personal loan and credit card interest rates are usually 4-10% higher than secured debt such as a home loan mortgage interest rate. One solution might be to consolidate your debts under your existing mortgage to substantially lessen the interest rate being charged.

Debt consolidation can also alleviate the pressure of making numerous debt repayments and reduce the total amount you pay each month. For example, if you have two or more personal loans or credit cards with a total outstanding balance of $30,000, you are required to make repayments of approximately $800 per month. By consolidating all your debts into a single loan with a lower interest rate and over a longer term, you may be able reduce your monthly repayments substantially to approximately $550 per month and save $250 per month (this is subject to the interest rate).

Is Debt Consolidation a “one size fits all” product or can it be tailored?

 

No. A debt consolidation loan will be tailored to suit your budget and lifestyle needs through your monthly repayments. The debt consolidation process will include budgetary assistance to help you keep on top of your repayments and make appropriate changes in later years should your lifestyle needs change.

In summary, a WealthMaker Financial Services debt consolidation based program will:

  • Be tailored according to your personal circumstances and objectives
  • Provide you with sustainable long term benefits, not just a short term fix
  • Give you peace of mind through having control over your debts
  • Reduce your financial burden through lower repayments and (potentially) shorter loan terms
  • Provide you with greater transparency over your total debt (no hidden costs)

WealthMaker Financial Services offer a range of finance products to assist you with your needs. We're here to help you to find the most suitable and competitive product.

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