I just had a general query concerning my loan for debt consolidation. An $8K loan for debt consolidation between my spouse and I’s six credit lines has been approved. Instead of making six different payments throughout the month, we would like to pay off the $15K card debt in one go. I want to know if it would be better to distribute the $8K over the six credit lines, so reducing our monthly payments, or to use the loan to pay off a few of our lines of credit in whole.
In my opinion, it’s preferable to pay off the smaller obligations first, then utilise your money to pay off the other loans. In this manner, the interest from the smaller loans is avoided.
Consider your mental health. Are you more stressed out by having more bills to pay off and handle, or are you more stressed out by debt with higher interest rates? This includes having to make additional payments on a lot of bills. Stress related to money can really take a toll on your mental health.
It’s advisable, I’ve heard, to pay off your high-interest credit cards or loans before using the money you would have spent to settle them to your other bills. I believe it’s known as the avalanche or snowball method.
Make a list of the interest and credit line balance before making a decision.Rather of distributing the 8K over all six, I would aim to remove as many lines as feasible without consulting any figures.
Generally speaking, I aim to knock the biggest first, unless there are only 300 or so.