The uncertainty of 2020 has taken its toll. But amidst a turbulent year, many Americans are finding ways to reduce debt stress.
A recent study showed that, since the COVID-19 pandemic, debt is down and credit scores are up on average.Disclosure 1 Many people have become more wary of debt, so they’re accruing less of it, and those who can afford to are taking the opportunity to pay down their existing debt.
Whatever your situation, it’s always a good time to reduce debt stress where you can. And while there are different solutions for tackling debt, for many, a smart path forward is debt consolidation.
Consolidation = one monthly payment, one rate
Debt consolidation is exactly what it sounds like: combining a series of smaller loans into one larger loan. Ideally, the consolidation loan also comes with a lower interest rate compared to your existing loans. When times are tough, the less stressful information we have to process, the better. With so many decisions to be made—especially about which debt to pay off first—debt consolidation can provide a simpler way to repay multiple loans and make it easier to view your financial situation holistically.
Perhaps one of the biggest positive effects of debt consolidation, however, is the liberating feeling you get when you shift from having four or five monthly payments to just having one. It can help you free up cash flow for other priorities, maintain a positive mindset, reduce debt stress, and ultimately lift some of that weight off your shoulders. Plus, it can give you a fresh payoff date, which can both motivate you and provide peace of mind.