Is It Time to Consider Bill Consolidation?

Making the decision to consolidate your bills with a debt relief plan shouldn't be taken lightly. Despite the proliferation of ads marketing the benefits of bill consolidation, many consumers find that they're able to save time and money by paying off their debts on their own. However, if you're in over your head, a bill consolidation program is one option that can help you get out of debt and plan for your financial future.

With a bill consolidation plan, you work with a company to pay off existing debts; instead of making multiple payments, you'll just make one monthly payment to the new company. Consolidating your bills may allow you to reduce the amount you pay toward your debts every month or become debt-free more quickly than you would on your own. One of the biggest challenges with bill consolidation is determining whether it's the best solution for you and your individual situation and goals.

Who Really Needs to Consolidate Bills?

Let's face it - nobody plans to get into debt.

It starts out innocently enough - you purchase a few items on your credit card and plan to pay them off right away. Next, you open an account at your favorite retail store - after all, you get a 15% discount just for using your card that day. Then the holidays roll around, and since you don't want to disappoint your family, friends, or coworkers, you spend a little more than you should.

Before you know it, all those purchases add up, and you're left wondering whether you can pay them off on your own or whether you should consider consolidating your bills.

Not everyone who has some debt to pay off needs a bill consolidation program. For example, consumers who have good credit, can easily make their monthly payments, and have a small amount of debt, can likely pay off their bills on their own without resorting to bill consolidation. With just a little extra budgeting and discipline, it's very possible to pay down the debt within a few months.

But what if your debt is more substantial, and you're not sure how you'd even begin to pay it off without help? Then it may be time to research bill consolidation companies and the plans they offer. If you're wondering whether consolidating your bills is a good option for you, ask yourself the following questions:

• Am I falling behind on my payments? Missing one payment doesn't necessarily mean you need to think about bill consolidation. It becomes a bigger problem when missing payments becomes a pattern.
• Do I have a large amount of revolving debt, including credit cards and retail store cards? It can take months or years before balances get uncomfortably high. Pay attention to what you're spending on your cards, and consider reaching out to bill consolidation companies if your balances reach a certain amount.
• Am I using credit cards to pay for basic necessities? It's O.K. to use credit cards for everyday purchases like food and gas, as long as you're able to pay it off each month. It's a problem when you're forced to pay with credit cards because you don't have enough in your bank account to cover these necessities.
• Have I opened new credit cards to pay off existing card balances? This cycle of revolving debt won't get you anywhere. What begins as an introductory 0% interest rate for a balance transfer can turn into hidden fees and a skyrocketing interest rate once the trial period ends. Rather than open a new card to pay off other card balances, consolidating your bills and making one payment may be a better option.
• Creditors keep calling. Creditors are generally quiet when you're making your payments on time; but once you miss a few payments, you'll get calls from them on a regular basis. In this situation, a bill consolidation plan could help you pay off existing creditors and stop those collection calls.
• Friends and family suggest you get help. If you're feeling overwhelmed by your bills and are having trouble making your payments, chances are you have someone close to you who's well aware of your financial situation. If you find that friends and family recommend you seek help from a bill consolidation company, consider their advice and take the first step to see if a debt relief plan is right for you.

It's never easy to admit that you can't reach a goal on your own, but there are reputable bill consolidation companies out there that understand the situation you're in and can help you get out of debt. Not only will they tackle today's bills - trustworthy companies also will offer financial education and support along the way so that you can stay debt-free and better plan for your future.

For more information on bill consolidation plans and companies, visit CareOne's community forums, where financial experts and everyday consumers can offer you opinions and advice.

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