Being flat broke is hard enough, but things can get even more complicated as soon as you have a little bit of money to throw around. Once you’ve paid for the basic necessities of everyday life, you’ll need to determine how best to use your newfound financial freedom; should you add extra capital to your emergency fund or pay down debt? Both of these concerns are important, and it’s possible to have it both ways with the help of debt settlement and debt consolidation.
U.S. Household Debt Statistics
According to Nerdwallet, national consumer credit card debt reached $420.22 billion in 2018, which is more than a 5 percent increase from last year’s numbers. The average American household with debt has around $7,000 in revolving balances, which is a type of debt that persists from month to month and rapidly accrues interest. When consumers have lots of revolving debt, it’s often impossible to do more than keep interest at bay; the principal of this type of debt can remain maddeningly out of reach.
Credit card debt is only one part of the equation. Increasing costs and stagnant wages have made debt necessary to purchase almost every high-priced commodity. From mortgages to auto loans, the average American household with any type of debt owes over $130,000. If you owe anything in student loans, your debt situation can become even more difficult to handle.
Debt Gets Worse When You Don’t Have an Emergency Fund
Being in debt makes everything harder. While it’s easier than ever for American consumers to take out loans and qualify for credit cards, the negative effects of being in debt remain incredibly harmful.
For starters, being in debt makes it harder to take out other loans. Potential lenders take a close look at your credit history and credit score as they determine whether or not they should loan you money. If you have a history of trouble with debt or you currently have more debt than you can pay off, you may have trouble getting financing for cars, houses, or even the credit cards that you depend on for everyday transactions.
If your credit score is bad enough, you could even have a hard time getting housing. In a worst-case scenario, racking up debt could make it hard for you to buy basic commodities, have a job, or find adequate housing. With all these negative effects of debt to consider, you are most likely having trouble paying it back. It’s no wonder that when you owe lots of money, stress can build and can cause severe emotional disturbances that lead to insomnia, stress, and greater risk of gastrointestinal and heart disease.
If find yourself wondering “Should I start an emergency fund or pay down debt?” it’s important to consider more than just the financial benefits an emergency fund can provide. Putting aside an emergency fund is one of the best ways to protect yourself from the negative physiological, emotional, and financial effects of debt. An emergency fund serves as a safety net for unplanned bills. The main reason why people have debt is that they don’t have savings, so an emergency fund can end the debt cycle once and for all.
How Debt Consolidation and Settlement Can Help
If you decide to tackle your debt with debt consolidation or debt settlement, you can free up your ability to accrue an emergency fund that will make monthly payments a breeze. Paying off your debt when you’re living paycheck-to-paycheck can be nerve-wracking, but if you’re able to put something away in the bank by reorganizing your debt, your future will quickly start looking much brighter.
What Is Debt Consolidation?
Some of the worst aspects of credit card debt are the high interest rates that are associated with most credit cards. Debt consolidation is when you take out a single low-interest loan that you use to pay off all of your credit card debt in one fell swoop. With your high-interest debt off your plate, you can focus on tackling your consolidated loan at a reasonable pace.
Debt consolidation will allow you to bundle all of your monthly payments into one manageable one. The trusted staff at Christian Debt Counselors has worked with consumers to eliminate their debt for many years.
What Is Debt Settlement?
In addition to consolidating your debt, Christian Debt Counselors will also reach out to your creditors to negotiate lower interest rates. This process is called debt settlement, and it’s the right idea if you want to keep some of your existing debt instead of consolidating all of it under one loan. With lower interest rates from your current creditors, it becomes easier to make monthly payments.
Become financially independent and as you work alongside Christian Debt Counselors to settle your debts. We work with various independent law firms to negotiate a better rate for our clients.
Tackle Your Debt Problems Today
If you can’t decide whether to shore up your emergency fund or pay down debt, Christian Debt Counselors can help you do both. In addition to helping you consolidate your debt, we’ll also keep your creditors off your back by negotiating for new interest rates on your loans. Contact us today to get the debt help you need to get out of the red and stay in the black for good.