Debt Management. Debt Consolidation. What’s The Difference?
Turning the Difference into an Opportunity to Control Your Debt
Perhaps the single most challenging issue we face with our debts and our ability to manage them is the fact that it is spread out. Loans, credit cards, and payables of all kinds challenge our debt management process. On average, Canadian consumers owed over $21,000 coming into 2016, a jump of 2.7 per cent year over year. And that didn’t even include mortgage debt. In some segments of the population, debt jumped by close to 6 percent.
A fragmented debt management plan is like trying to handle a family of many children with attention deficit disorder. Our ability to balance the variables becomes influenced by our inability to manage the priorities. Depending on the time of year, we may ignore some bills to pay others in order to address the needs of a season. For example, we may decide to put more onto our credit card bill because a gift giving season is coming. Don’t beat yourself up; most of us do this, especially those of us who pursue a fragmented debt management plan — or lack thereof.
But here’s the thing. You could be paying double the amount every month to manage your debt when you don’t have to. That, right there, is the critical difference between “debt management” and “debt consolidation”. The problem is a fragmented debt management plan invites negative impacts on your credit score.
You could be paying up to 100% more than you need to
because of a fragmented debt management process.
Conventional banks look at your debt this way: they add up all of your monthly debt payments including taxes and heating (of your house). If the number exceeds 40% of your income, which lenders call your Total Debt Servicing Ratio (TDSR), the probability is, they won’t lend you money. So, what do you do?
Alternative financing, such as debt consolidation plans offered by Cashco, give you the opportunity to pull together your debts in a way that will reduce the various monthly payments you are juggling with. It is important to understand that each individual is different. When you assess alternative financing sources, you want to see how they address your situation. Some may suggest you put everything in one basket. Others may look at different solutions that may even be more complex.
As trite as it may sound, how they treat you is just as important. Do you feel you are being treated as a person or a number? It does make a difference. If they are addressing the person, it means that they are interested in how you operate financially and how you can become a long term success story as you not only meet your debt obligations consistently, but you also maintain and, often, improve your credit score.
A debt consolidation loan will help reduce your monthly payment and free up your cash flow. In some cases, you may cut your monthly debt payment by up to 50 percent in some cases.
A debt consolidation loan can cut your monthly payments
and increase your cash flow.
Any reduction in the amount you pay every month is worth it. It is very normal for people to feel uncomfortable about talking to someone about their financial situation. Companies, like Cashco, have developed a debt consolidation process that is designed to put people at ease. More importantly, it is a strategy to help people with debt focus on how they can build a debt management plan that based on consolidation that will contribute to a near term solution and a healthy, long term way of doing things financially with debt.
This is why Cashco has Flexloans. They are designed to be more flexible in terms of the amount you need and the terms of repayment. You can take as long as you need to repay up to 3 years without any penalties to retire the loan early. This is a big difference between the Cashco alternative and what other more mainstream banks offer. A Flexloan is a response to the reality of the ongoing needs of Canadian consumers to manage their debts. It is no mystery that the amount of debt for anyone will vary from month and year to year. Why can’t debt consolidation loans do the same, right?
If you are feeling the pressure of your debt, take the step now. There are solutions. You don’t have to manage your debt piecemeal. Consider a debt consolidation loan and free up your money.