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Kelly Wilson
by on December 18, 2019
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Financial management is one of the most difficult tasks for new business owners. If you are troubled with multiple payments and unmanageable due dates, debt consolidation is one potential solution you can consider to get out of trouble. In this approach, your credit card payments, other lines of credit, and all existing loans get consolidated to a single lump sum. Get more at Jhhdhasdsfg.host

With consolidation, you may also be able to enjoy a lower interest rate and a high flexibility on payments over an extended period. However, even though there are many benefits to availing these loans, you could encounter some problems if you are not savvy while doing consolidation..
Expert talks.
• Ronnie Bossler, a financial counselor at a leading debt consulting firm, says that "somebody who goes for consolidation is over their head, and consolidation only acts as temporary stitching on a bigger problem.".
• "A consolidation is just a quick fix and not a permanent solution since the debt will not magically vanish after consolidation' says Lewis Carol, a certified financial analyst and consumer advisor on debts. He adds that "debt consolidation will not do anything on its own for you.".
Though it is true that consolidating your debts will not relieve you of your obligations, and you will have to pay back every penny that you borrowed, it helps you by eliminating the clutter of multiple lenders and several payment dates. Let us discuss the five common mistakes that business owners often tend to make when approaching debt consolidation..
Mistake #1: Not acknowledging the actual cause of the problem.
Startup business owners think of debt consolidation simply because their debts get out of hand and they fail to manage the repercussions. Having all the different consolidated does give you some room to breathe freely, but it does not address the root causes which sunk you into unmanageable debts in the first place..
• Bossler says "When I offer debt advice to someone, I primarily encourage them to explore the reasons why they got into debt and work on the root issues first.".
Consolidation usually occurs with larger debts of $10,000 or more. We can very much assume that these debts did not pile up overnight, so there is no overnight solution for this either. If you do not work on what made you a bad debtor, you may fall into the debt trap again..
Bossler and Carol have a lot of stories of clients who promise not to chalk up unmanageable debt again, but within the next few years, they naturally return to the old ways. "If a person doesn't change his or her habits, I can guarantee that they will be right there again in just a matter of months," says Lewis. He also adds "getting out of debts steadily over time is all about changing one's behavior and readiness to sacrifice.". To get more info here:www.MoneyLend.net
Mistake #2: Not researching your options.
There are plenty of modes of debt consolidation and providers out there. The options include secured or unsecured loans, transfer of specific debts to another line of credit, and credit card balance transfer. There are debt settlement and debt management plans for the health.
• Debt settlement is the process of paying off a debt in full with discounts if any. The debt settlement companies may negotiate with the creditors and get the best deals for you for a commission..
• The debt management plan is mediation between you and the creditors that is initiated by a nonprofit debt counseling facility while consolidating your #3: Not having a proper consolidation plan.
In many cases, when considering consolidation, people wrongly assume that they have to consolidate all of their debts. There is no such rule that you have to consolidate all loans together. If there are a few loans with lower interest rates that you can easily pay off on your own, you may leave those out of your consolidation plan. As a rule of thumb, you should always consolidate the high-risk, high-interest loans that are harder to repay or manage..
• " There is obviously a psychological effect while combining all your debts into one and making it more manageable, but if you do not do proper calculations to identify the impact of interest rates on you, consolidating will not make sense," says Bossler..
Mistake # 4: Choosing the wrong provider.
Debt management and settlement industry are notorious for shady techniques and aggressive adverse practices. There is every possibility that firms withhold the payments from the creditors for many weeks or months to cut a deal. It may cause severe damages to the credit scores..
Another adverse practice of the settlement firms is collecting a service fee even before obtaining the results. However, The Federal Trade Commission has now banned such unlawful collection of fees, but service charges may still be hefty for consolidation..
Not all agencies may be ideal for all types of people. The best option for the consumers is to check the Better Business Bureau about the organizations in your region. You can also view the company's website directly and see the reviews and ratings. You should avoid companies that bombard you with a lot of annoying calls, emails, or aggressive sales tactics..
Mistake #5: Not having a proper plan to move forward.
As discussed above, you first need to develop a stable and working plan to pay off the consolidated loan. With a long-term action plan, you will not blindly pay off your debt or further make it unmanageable. You can sit down with a credit counselor or financial advisor to create a proper budget for your small business based on your actual revenue and expenditure..
Entrepreneurs need to keep the points above in mind when thinking of consolidating their debts. Once you can accomplish it well, debt consolidation can surely be an ideal vessel to take you on to the safe shore..
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Topics: business, loan
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