Financial independence is at the core of the American Dream.
Paying Down Debt The first major step a person must take toward gaining control of their personal finances is deciding to eliminate all personal debts. You simply have to be willing to cut expenses, which may mean less eating out, less entertainment, and fewer shopping trips each month, and then you direct this extra cash flow toward paying down your debts.
Now, the most powerful variable in the world of personal finances is interest rates.
Interest rates are an extremely powerful, but neutral force.
They can work against you and keep you in financial bondage, or they can work for you and make you financially independent.
Interest rates work against us when we are holding bad debts, such as auto loans, credit card debt, department store debt, small business loans, and even college debt.
One common step that many people take when they get serious about paying off debt is to consolidate debt into one monthly payment through a debt relief program.
The Pros If you consolidate your debt you will benefit immensely from a lower interest rate.
Most debt consolidation programs will negotiate with your creditors and negotiate a much lower interest rate than you are currently paying.
This will reduce the amount you are paying in interest to your creditors each month, which will in turn increase the amount you are paying down on your debt each month, which will then significantly decrease the amount of time it takes to pay off your debts.
In the long run, a debt consolidation program will oftentimes help your credit because it will reduce your debt and your monthly minimum payments, which all affect your credit score.
The Cons In most instances, you will suffer a moderate credit score decrease when you enter into a debt consolidation program.