According to a study by Northwestern Mutual, nearly 75% of Americans currently carry some kind of debt, whether through credit cards, car loans, mortgages, etc. With saving and spending patterns varying greatly from generation to generation, it may be difficult to understand how debt affects your financial health and if you’re carrying too much. Here are four signs to look for:
You’ve maxed out all your credit cards
You have loans with multiple lenders
You’re only able to make minimum payments
You’ve lost track of what expenses you’re paying each month
You might be surprised to hear that one of the best things you can do to get out of revolving debt like this is to take out a debt consolidation loan. Here are the ways it can help:
Simplify your payments
Taking out a loan simplifies all your bills into one monthly payment. Often, a debt consolidation loan will mean lower monthly payments for you, so you’re not just covering all your expenses, you’re freeing up cash for other uses or to invest toward your future.
Take control of your finances
Consolidating your debt with a fixed-rate loan puts the power back in your hands. Not only can you control which date your monthly payment comes out of your account, you don’t have to worry about your interest increasing without warning. This consistency allows you to start making strides toward financial stability by being able to plan around a consistent payment each month.
Increase your credit score
Paying off outstanding balances with a loan may improve your credit score. This strengthens your financial profile and puts you in a more advantageous position should you choose to seek out loans in the future, whether for personal or professional reasons.
Improve your DTI
Your debt-to-income (DTI) ratio is calculated by dividing the amount you owe by the amount you earn before taxes, withholdings, etc. For example, if your monthly debt payments are $2,000, and your monthly income is $5,000, your DTI is 40%. Ideally, your DTI should be below around 30%. Consolidating your debt with a lower monthly payment improves your DTI, which impacts your overall financial health. Having a stronger financial profile sets you up to take advantage of better financial opportunities in the future.
If you’re feeling caught in the revolving debt cycle, it’s time to consider a debt consolidation loan. At BHG Money, our personal debt consolidation loans go up to $200K* with extended repayment terms,* giving you an affordably low payment each month.
Ready to secure financing? Call to speak to a loan specialist today, or use our Payment Estimator below to see how affordable your monthly payment could be in as few as 30 seconds.
*Terms subject to credit approval upon completion of application. Loan sizes and interest rates vary and are determined by applicant’s credit profile. Call for complete program details. For California residents: Consumer and commercial loans are made or arranged pursuant to the California Financing Law, License No. 603-G493.