Before You Consolidate

Debt loans can be powerful tools, but only if used appropriately and as part of a larger financial strategy. Before you go any further with how to get a consolidation loan, it’s essential that you sit down – with your significant other, if applicable – and make a thorough household budget.

List your reliable monthly income in detail. Account for everything you can think of – your paycheck, any retirement you’re receiving, government benefits, alimony, sales from your eBay or Etsy account, etc. Then list and categorize your spending over the past 3 – 6 months. This is where it gets difficult, sometimes emotionally as much as mathematically. Many of us work very hard at not thinking too closely about how or where we’re spending our money, or how much goes to what. This is something we simply must overcome if we’re going to make sustainable financial progress.

It may take a few tries, so don’t get discouraged if you can’t account for all of your spending even though you’re certain that the money is all gone (because you don’t have it anymore). Some things you’ll have to estimate, only to discover that you’re spending way more than you thought on groceries or way less than you’d imagined on clothes for the kids. An accurate and meaningful budget matters because that’s the only way we get control of our personal finances, however uncomfortable it may be at first.

At Loanry, we’ll never try to tell you HOW to spend your money. It’s YOUR money. We will, however, encourage you to be honest with yourself about how you’re spending your money, so that your decisions are informed by the facts. That’s where the emotions come in – some of us don’t want to know the facts, because then we have to decide what to do based on those facts. Difficult is not the same as impossible, however. Press through this part and stick with it, and before long you’ll find your written budget to be a source of power and flexibility instead of a burden. You got this. And we’re here to help if you ever start to doubt that.

True Debt Termination

Debt loans provide great opportunity, but alongside that opportunity is potential danger. See, as soon as you’ve paid off all of your miscellaneous debts – credit cards, medical bills, personal loans, car payments, etc. – your credit history is going to show dramatic improvement, especially after you’ve made the first few payments on your consolidation loan.

This will not pass unnoticed by new credit card companies, department stores, furniture outlets, auto dealers, or anyone else who regularly scans their potential customer database for what looks like a potential customer. You’re going to start receiving offers you couldn’t have begged your way into a year ago, and you need to shred them all as they arrive. Even worse, some of us are going to look at that “zero” balance on our credit card statement and figure we should celebrate by taking the family out to dinner – which isn’t so bad in and of itself. The next weekend, we’re going to do a little shopping, because the kids need school clothes. And that old flatscreen has been on the fritz. And you need to buy a wedding present. And really it makes more sense to replace that old truck than keep fixing it. And… and… and…

And before you know it, you’re back in unmanageable debt just like before, this time with a new wrinkle – you’re still paying on that debt consolidation loan for several more years even as you struggle to keep up with the new half-dozen monthly expenses you’ve somehow taken on since then.

This isn’t intended to make you feel bad, or to tell anyone what you can or can’t do with your money. But let’s be honest with ourselves – unmanageable debt doesn’t usually come in one fell swoop overnight. It’s usually the product of months or years of careless decisions combined with a moment of unavoidable bad luck or personal misfortune here and there. Consolidation loans aren’t magic. They don’t make your debt go away; they make it more manageable. You have to do the rest by managing it – every day, every week, and every month, until it’s actually paid in full and gone.

The good news is that you’re absolutely capable of doing this; we’re sure of it. And you don’t have to do it alone. We’ll be here the whole time to talk you through it along the way.