Simplify Your Debt Repayment Strategy

It happens to the best of us. We shop for holiday presents to excite our friends and families and sometimes go a little overboard. According to a survey by the Conference Board, consumers planned to spend an average of $985 on holiday related items in 2023. Looking back on all the spending can be daunting, especially if you went over budget, despite finding great deals.

If this happens to you, debt consolidation may be a smart strategy to help you repay your credit cards and commit to one goal, allowing you to have one vision toward repayment. Debt consolidation is a strategy that allows you focus on just one payment each month instead of multiple bills, which can help reduce stress and simplify your budget. Workers Credit Union has insights on how you can determine if this strategy makes sense for your situation.

Understand The Method

Debt consolidation is the process of taking out a new loan to pay off multiple bills at once, so you end up with just one monthly payment with a lower interest rate. This strategy is frequently accomplished using a personal loan, or with a home equity loan if you’re a homeowner.  Balance transfers between credit cards can also be considered a consolidation method. All these methods offer solutions to organize your debt and make repayment easier. Sometimes people make the mistake of not shopping around for loans. It’s important to understand interest rates, research your options, and consider upfront costs when applying for loans with lenders. Workers Credit Union offers personal loans that can help you simplify your budget.

Know Your Budget

Understand your cash flow and net income after taxes. If you decide that debt consolidation is a strategy for you, the payment should be built into your budget to help repayment go as smoothly as possible. It’s also important to understand your temptations, so you don’t go back into debt after repayment. Here’s a real-life example of how debt consolidation can change your life: A Workers Credit Union member was laid off from her job and struggled to find work. Vazquez met with her and her husband a few times before deciding to go the route of debt consolidation. Together, the three of them looked at bills from the past 3 months to understand the couple’s average expenses and established a reasonable budget. In doing so, they were able to consolidate $30,000 of credit card debt, saving $633 a month. Her and her husband haven’t gone back to temptations with overspending and are doing significantly better.

Learn more about Workers Credit Union's personal loan options to consolidate debt and simplify your budget.