Missouri debt consolidation is one of the many strategies consumers can adopt to resolve their debt issues. Every consumer’s financial situation is different, but consolidation generally applies if yours is manageable debt. By consolidating your consumer debts, you can avoid filing for bankruptcy and other options that may hurt your credit for years. In this post, we discuss how debt consolidation works, and other debt relief options in Missouri.
Missouri Debt Consolidation: What Does it Mean to Consolidate Debt?
It is not uncommon to hear Missouri consumers asking: Is Missouri debt consolidation legitimate? Indeed, many Missouri residents struggle with debts, including student loans, auto loans, mortgages, credit card debts, medical bills, and payday loans. Debts such as credit card debts, medical bills, and payday loans can be consolidated for easier and less costly repayment. But what is consolidation, and how does it offer debt relief?
Simply put, debt consolidation is the process of combining multiple, high-interest debts into a single payment. Having to make several payments every month can not only be tiring but also puts you at risk of skipping a payment. Consolidating your debts leaves you with one monthly payment, making it easier to track payment dates. Unlike other debt relief options, consolidation is easy DIY option that requires little to no intervention by a personal financial expert.
Credit Card Debt in Missouri
Americans love credit cards as they offer an easy means of payment. Yet, they are even easier to abuse. Over the past year, Missourians have heavily relied on their credit cards due to reduced household incomes. With the overall cost of living on the rise, there is no end in sight to the ballooning credit card debt in the U.S.
While the revolving credit card debt has been on a downward trajectory since 2020, Missouri residents continue to rely on credit cards for emergencies during the pandemic. The average Missourian has $5,117 in credit card debt, which is some way below the national average ($5,525). As the pandemic continues, Missourians’ finances continue to worsen, particularly due to reduced incomes coupled with the high cost of living.
Process of Consolidating Debts in Missouri
Consolidating debts is a relatively simple process. Regardless of your preferred consolidation option, you can go about Missouri debt consolidation by following several steps. Below, we discuss the general debt consolidation process.
Establish Your Debt Details
Collecting details about all of your debts helps you find out whether debt consolidation in Missouri is a sensible strategy. If you have non-credit card debts, go through your account to get the necessary details. If you’re looking to resolve credit card debt, monthly credit card statements will provide you the details required to start your Missouri debt consolidation process.
From these statements, you will get important details such as the minimum payment, current balance, interest rate, due date, and annual fees. Getting details for debts that you don’t plan to consolidate is also essential as it helps you make an informed decision before starting the process.
Determine Your Monthly Earnings
Getting a clear picture of your monthly income is vital to the debt consolidation process as it tells whether you can afford to make minimum monthly payments on time. Checking your recent paycheck stubs is a good way to know your total monthly income. If your monthly income can’t support consolidation, then you can explore other debt relief programs.
Draw Up Your Budget
Preparing a budget helps you measure your monthly incomes and expenses. When doing this, be sure to separate the fixed and variable expenses. Expenses such as rent, auto loans, insurance, and student loans fluctuate less while variable expenses such as groceries, gas, and recreation often change from month to month.
Before exploring the various Missouri debt consolidation programs, determine your disposable income by subtracting your monthly expenses from your monthly income. Also, remember to include any payments on accounts you don’t intend to consolidate when putting together your budget for more accurate numbers.
Crunch the Numbers
After determining your income, expenses, and budget, you can easily do the math and find out your probable monthly debt consolidation payment. Dividing your total debt with the number of months you wish to pay it off will help you determine your monthly payment.
Be sure to compare this monthly payment to your disposable income. Basically, you should have sufficient disposable income to comfortably make your monthly Missouri debt consolidation loan payments.
Assess Your Missouri Debt Consolidation Options
Debt consolidation isn’t always a suitable solution for debt. What’s more, debt consolidation options available are only applicable depending on your unique financial situation. Below are options for debt consolidation MO consumers can explore depending on their debt type and amount.
Obtaining a Debt Consolidation Loan
If you have good credit, you can apply for a low-interest consolidation loan from Missouri banks, credit unions, or online lenders and use it to pay off all of your debts. You can also borrow a personal loan from your family and friends and resolve your debt issues.
Securing a debt consolidation loan in Missouri helps you save significantly on interest charges as well as focus on a single monthly payment. This reduces the risk of skipping payment, which may attract penalties if it happens.
Credit Card Balance Transfers
Consumers seeking credit card debt relief can do credit card balance transfers. This process involves moving all your high-interest credit card debt to one zero or low-interest credit card and making payments on that credit card over time. Most of these cards are offered at zero interest for a promotional period, and paying off all your credit card debt during this period could translate into huge savings.
Debt Management Plan
Consolidating debt with poor credit can be arduous, but working with a credit counselor could help you resolve your debt issues. If you don’t qualify for other debt consolidation options, a credit counselor can formulate a debt management plan after assessing your financial situation.
Through a debt management plan, you get to make a monthly payment through your agency, which then makes payments to all your creditors.
When seeking Missouri debt relief, consolidation could offer you a fast way out of debt without negatively impacting your credit. Depending on your debt type, you can explore the various consolidation options discussed above. Regardless of your preferred option, consolidation helps you focus on a single monthly payment and potentially save on interest charges.