Is Debt Consolidation Right for you in 2024?
Happy Holidays RESET family!
I hope you had a wonderful Christmas holiday. And, if you’re new here, Welcome! Take your shoes off, grab a blanket, get comfy and join us by the fire. We’re gonna talk about 2024…before we get to 2024.
I’ve been talking to some of my clients about their finances (of course), and what they can do to amp up their debt repayment efforts and reduce the amount of money going out every month. Thus, the conversation around debt consolidation has come up more than once, especially as we prepare to say farewell to 2023, and open the door to 2024!
If you, too, are being enticed by inserts and offers from creditors to consolidate your debt…STOP and READ THIS FIRST! The decision to venture into debt consolidation requires careful consideration of your individual circumstances, no matter how enticing those mailers and inserts are. Consolidation can be a help, or a harm if you don’t consider the outcomes in advance - it is not a one-size-fits-all solution.
Consider these 7 focus areas before jumping into debt consolidation:
Understanding Your Debt Profile
Consider Your Financial Goals
Your Credit Score
Your Debt Consolidation Options
Consider Your Spending Habits
Create a Realistic Repayment Plan
Seek Help
1. Understanding Your Debt Profile
The first step in the debt consolidation journey is a thorough understanding of your existing debts. List all outstanding balances, interest rates, and monthly payments. This full view will help you identify, and for some acknowledge, your financial situation and determine whether debt consolidation is a viable option.
2. Consider Your Financial Goals
Whether you call them goals or core values, ask yourself: What are the things that I want out of life that are currently blocked due to my financial situation? What would my life look like without debt? For me, it was home ownership. Owning my own home and being able to take advantage of tax write-offs as a single woman became very important to me. Whether it's saving for a home, starting a business, or simply achieving a debt-free life, recognizing the things that are truly important to the life you desire to live will guide your debt consolidation decisions. A debt consolidation plan should align with your long-term financial goals rather than serve as a temporary fix.
3. Your Credit Score
Your credit score plays a crucial role in securing the best terms for a debt consolidation loan. Before making any decisions, obtain a copy of your credit report and assess your score. A higher credit score may qualify you for lower interest rates, potentially saving you money in the long run.
4. Your Debt Consolidation Options
There are various debt consolidation methods, such as balance transfers, debt consolidation loans, and debt management plans. Each option comes with its own set of advantages and considerations. Take the time to research and understand the implications of each method, choosing the one that best suits your needs and financial situation.
5. Consider Your Spending Habits
Debt consolidation is not a cure-all; it's a tool to simplify and manage debt more effectively. To achieve lasting financial freedom, it's crucial to address the root cause of your debt. Reflect on your spending habits and identify areas where you can make positive changes to prevent future financial challenges. Need support - RESET can help.
6. Create a Realistic Repayment Plan
When consolidating debt, it's essential to create a realistic repayment plan. Assess your monthly budget, ensuring that you can comfortably make the consolidated payments without sacrificing essential expenses. A well-thought-out plan will set the foundation for successful debt management.
7. Seek Help
Consulting with a financial coach at RESET Budgeting and Financial Coaching can provide valuable insights tailored to your specific circumstances. RESET offers personalized advice on debt consolidation, helping you make informed decisions about your specific financial profile to ensure the decision to consolidate, or not to consolidate, aligns with your financial goals.
Debt consolidation can be a powerful step towards financial stability, but its effectiveness truly is up to you. Remember, creditors are NOT doing you a favor by offering you the opportunity to consolidate your debt. The initial terms may sound amazing such as “0% interest for 6 months”, and “Transfer your balance with no fees.” Creditors bank on the fact that you will pay the minimum payment on this debt, and after those “magic” terms are up, interest rates can soar up to 24 and 25%, compounding interest on interest. You must have a solid game plan in place for this debt strategy to be successful.
By understanding your unique financial situation, setting clear goals, and making informed decisions, you can use debt consolidation as a stepping stone to a debt-free future. Remember, the journey to financial freedom is a personal one, and taking the time to tailor your approach will yield the most sustainable results.
Have a wonderful rest of 2023 and Happy 2024! See ya in the new year!
J’Neane
5 Ways to “Autumn-Proof” your October
As the leaves begin to turn and the cool breeze of autumn sets in, it's not just your wardrobe that needs a seasonal transition – your budget does too! Autumn brings its own set of expenses, from back-to-school shopping to early holiday preparations. But fear not! With a touch of foresight and strategic planning, you can prepare your finances for the season ahead. Dive into our latest blog to discover five essential tips to autumn-proof your budget, ensuring you're not caught off guard by those unexpected fall expenses.
Happy Fall Resetters! Welcome to the last 90 days of 2023!
With just three months left before 2024, I’m mindful of the triggers that come up for me around this year…
Specifically, holiday spending, and retailers know just how to entice us into their biggest revenue-generating quarter of the year. If you've had an Amazon package delivered in the last month, you’ve seen their advertisement for October Prime Big Deal Days printed right on the box tape. Didn’t we just have Prime Days?! And there’s even some stores online that are running “Black Friday” sales already! What?!
-Sidebar- Black Friday is reserved for Thanksgiving night, after you have enjoyed your family, thank you very much (just my personal opinion).
Retailers create their marketing plans months in advance to tug at our “purse/wallet” and heartstrings, which can result in added debt in an effort to tangibly show our “love” to those we care about. I understand this now, but for many, many years I went into debt in the name of “love”, but really it was to avoid embarrassment.
Honestly, I couldn’t fathom telling my family that I couldn’t afford gifts for them.
My budget showed me this truth, but it also showed me what I still could do. My gift-giving just had to look a little different than all the money I was used to spending and financing.
My BUDGET and my commitment to my GOALS had to be bigger than my pride.
This may not be your story, and that’s OK. But, if you can relate, and just thinking about this time of year is starting to stress you out, remember, your budget is YOUR PLAN, and the way you have decided to spend YOUR MONEY, taking into consideration the goals you want to achieve. It doesn’t have to be all or nothing, unless that’s your personal decision.
If you want to take advantage of Black Friday - PUT IT IN THE BUDGET.
If you want to splurge on holiday dinner this year - PUT IT IN THE BUDGET.
BUT, if this spending will jeopardize your financial goals, you gotta ask yourself, “Is it worth it to set myself up for even more debt in the new year?”
Looking at your past spending habits every month can be tough, but also worth it to get to the other side of your goals. I promise.
Check out the 5 ways I’ve figured out how to manage my fall spending and keep myself financially on-track:
5 Ways to Autumn-proof your October so you won’t get sucked into the hype!
Create your budget for October - FOR REAL. On paper or digitally - not just in your head. After you’ve accounted for your responsibilities, just how much do you have left over to spend? Start putting away small denominations of money to spend in November & December when the Christmas deals really get cookin’! Not sure where to start, RESET BFC can help!
Evaluate your “spending why”. Even though you may have the money to spend, should you? What else could you use that money for? And if you don’t, why do you want to spend money you don’t have? Like me, this will require you to do a little soul searching to evaluate your spending triggers.
Share the load - My family and I have mastered sharing the load around Thanksgiving. We collectively create our Thanksgiving menu, with each person volunteering to bring 1-2 items. No one is responsible for the entire spread. This works well for most occasions and gatherings, including Friendsgiving, etc.
Plan your spending in cash. During this season, it's even more enticing to get your “overswipe” on with debit and credit cards. Cash stuffers, keep doing your thing. If you’re not a cash stuffer, plan on using cash for your holiday spending to prevent overspending.
Don’t use credit cards - Trust me on this one. Those shoes and that toy, etc. won’t feel so “worth it” when you’re still paying for them into the new year.
Make sure you come back next month for “Understanding Financial Stress and How to Overcome It”. You won’t want to miss it!
Have an amazing October - you got this!