Debt Reduction & Consolidating Programs
Consolidate Debt
At MyBudget we understand how easy it is to get into debt. Your car suddenly needs repairs, your hot water service breaks down, you or your partner loses their job and you start relying on your credit card to make ends meet. There are literally thousands of ways to get into debt. We’ve seen them all, so we understand what you’re going through.
Why are you thinking about debt consolidation? Are you overwhelmed by credit card payments? Are you worried about losing your car? Are you paying off high-interest cash advances?
Ways to reduce your debt. Consolidate or not consolidate?
Many people believe the only way to relieve their debt is to consolidate their loans. This misconception is often fuelled by advertising slogans like “get out of debt—consolidate and save!” It’s important to remember that there’s more than one way to get out of debt. Consolidate your debt is just one option. It can work well in the right circumstances, but it’s not always the best solution.
Technically, debt consolidation doesn’t get rid of debt. It consolidates numerous debts into one loan. Debt consolidation is designed to lower your overall cost of repayments. Debt consolidation involves combining your high interest rate loans (credit cards, unsecured consumer debt, car loans etc) into one loan that has a lower interest rate.
Despite the numerous letters of offer you might receive from lenders to “eliminate your debt—consolidate your loans today!”, not everybody qualifies for debt consolidation. Lenders usually require borrowers to have an asset to secure the consolidation loan. This is usually a house or other real estate. You must also be able to demonstrate that you can afford the loan repayments. (See Do I qualify for debt consolidation?)
In most cases, debt consolidation involves refinancing your house to pay off your credit card and consumer debt. Consolidation sounds simple and sensible, right? Pay off your consumer debt, consolidate your loans into one payment, and have more money left over at the end of the month. Unfortunately, it’s not always that easy. There are some important things to keep in mind.
Debt consolidate only works when you also stick to a budget.
—Paul Clitheroe, personal finance expert
Many people join MyBudget after previously consolidating their debt, only to have maxed out their credit cards or get into debt problems all over again. Instead of finding themselves in a better position, they end up with more debt than they started with. (Read Nicole's story.)
The lesson is that debt consolidation only works when you also change your spending habits. That’s because debt consolidation turns short-term debt into long-term debt. Consolidate your debt and you may improve your cash flow immediately, but it may also expose you to extra interest payments over the life of the loan. That’s why it’s important to make extra loan payments. The faster you can pay off a consolidation loan the better.
Debt consolidate is only one option. Book a free consultation with MyBudget to explore all of your options.
Unlike companies who only sell loan products or debt agreements, MyBudget’s commitment is to find the right solution for every individual. That may or may not include debt consolidation. Our recommendation will depend on you and your specific circumstances.
What are some other ways to reduce your debt? You could potentially pay your way out of debt like so many other MyBudget clients—without taking out a new loan, changing your mortgage or affecting your credit rating. At MyBudget we look at your whole situation and work out what’s best for you. All of our solutions are tailored for your situation and lifestyle. We recommend only the very best strategy for you and your unique situation. .
MyBudget helped Leah and Kerin pay off their debt without taking out a further loan. We can help you, too.
Leah and Kerin paid of $20,000 in consumer debt without taking out another loan. The best part is that they don’t fight about money anymore.
Leah And Kerin:
"Things now are a lot better, a lot less stressful. Actually we don't stress about money, we don't fight about money," says Leah
To learn about other people's experiences with MyBudget, click here.
Nicole joined MyBudget after she refinanced her house twice to pay off her credit card debt…
—Nicole, North Ringwood
With MyBudget’s help, Alysa was finally able to refinance her house to pay off her other outstanding debts…
—Alysa, Dandenong
If they can reduce their debt, so can you. It starts with one simple phone call.
A free consultation with MyBudget is an opportunity to gain deep insights into your financial situation and all of your options. Even if you decide not to become a MyBudget client, the budget plan we prepare for you is yours to keep at no charge.
Change doesn’t have to be difficult. The first step is always the hardest, but in this case it’s as simple as making a phone call. Take the step today to get out of debt and start saving. It’ll be the best decision you’ve ever made.
Call 1300 300 922 or click here to book your free consultation now.
Want to know more? Click here to learn more about how MyBudget works.
Do I qualify for debt consolidation?
To qualify for debt consolidation, you must demonstrate:
- You can comfortably afford the loan repayments. As a general rule, you debt repayments should not exceed 30-35 percent of your gross monthly income.
- You have an asset to secure the loan. Most lenders will require you to have a real estate asset. This is why debt consolidation is usually done as mortgage refinancing. (Beware: If the balance of your home loan rises above 80 percent of the value of your home, your lender will require you to purchase mortgage insurance. This protects the lender, not the borrower, in the event you cannot make repayments.)
- You have regular employment and do not have a history of late payments.