Debt Consolidation Plan For Irish: Can Long-Term Loan Help?
Too much debt can put you in bigger trouble than you can imagine. Even before you realize you may be in critical financial status with no liquidity, bank account reflecting zeroes, and loan applications getting rejected.
Many Irish often express concern about how to gauge when debts have become ‘too much. Well, unlike a smoke or fuel detector, there’s obviously no option for gauging the debt bar. So, how can people be relieved of this?
If you face the same quandary, let’s help you with a few signs of measuring debt outburst.
5 Warning Signs That You Are In Too Much Debt
Without identifying the consequences, you may have taken loans after loans from various sources. And now you are in a big mess. So, how will you understand the depth of the mess? Check whether you have been doing the following for a long time –
- Highly relying on credit card –
A credit card is a sure-fire way to put you in debt. You are buying things with a credit card, which means you can neither manage within your monthly income nor save for the future. Now imagine a day when you’ll exhaust the credit limit. How will you manage then? That’s where the mess starts brewing.
The more credit cards you use today, the more will be your debts tomorrow. Therefore, if you are making too many payments using a credit card, it’s a sign that you’ll be in debt soon.
- Making less than minimum credit card payments –
Unlike personal loans in Ireland, credit card doesn’t come with any additional benefits like low-interest rate or longer tenure. In addition, the concept of minimum payment on the credit card is a trap in itself.
It may look like that you are paying the monthly owed installment to the creditor and have a good credit score, but there’s a broad chasm of progressive risk behind this illusion.
Wondering why minimum payment is a problem? Paying only the minimum installment means you’re just keeping up with what the creditor requires, not going ahead in any significant ways to pay off the debt. The interest that you pay gets eaten up by the money you have to spend again, and as a result, you’ll make more frequent use of credit cards to make up for that. This new credit comes with its own interest rates, and thus the cycle continues.
Therefore, only paying the minimum amount each month is a red flag, showing you need to stop using credit cards as soon as possible.
- Not using a budget plan –
If you have been moving without a financial plan, then apparently, you’ll land into a lot of trouble. It’s not how you should live your life. In fact, it is a sign that a mess is on your upcoming list. But if you want a debt-free life, you should plan your finances well.
Budgeting helps to keep track of your income versus your expenditure. Therefore, people with debt problems can see their finances’ actual condition before it slides down the edge. And on an immediate effect, they can take actions to improve their financial status.
All a budget does is help you be on track with your expenditure and financial goals. The quicker you prepare a budget in your life, the better you can manage your finances.
- Worrying too much without action –
Many Irishmen worry about their debts and keep on panicking. But that doesn’t make any impact on their financial status. Think of your situation — with so many debts if you keep on telling what should be done and do not take any action, will that help? No! What you really need to do is act with smarter financial plans.
You should know that debt is a symptom, so you need to dig deeper for identifying the real reason behind your over-expenditure. Until you get to know what’s causing the problem, you can’t solve the issue from the root. Well, no one knows your situation better than you do. So, spend a little time with yourself to find the real reason that’s operating behind.
- Not saving for emergency funds –
Often, debt happens when people do not save for emergency funds or have exhausted that fund. This is not destined to happen. It is a significant sign that you are in massive debt that may not be possible for you to repay.
Every individual needs to keep their emergency funds safe for serious exigency. If you couldn’t build up that savings, you may not realize how big a mess you have created for yourself and its impact on you.
These are signs that highlight you need smart financial goals at an early stage in life. The below segment explains how to prepare for financial goals in life.
Here’s What Your Financial Goal Should Look Like
SMART is an acronym for financial goals that stands for –
Whether you need short-term or long-term loans in Ireland to consolidate your debts, you must have well-planned financial goals in hand. This roadmap will increase your chance of repayment. Here’s a guide on how to create financial goals:
- Make your financial goals as specific as you can. For example, your goal is said to be specific when you decide to save £5000 a year for an emergency fund that will be used explicitly for home renovation or medical emergency.
- You should go for measurable goals to avoid being lofty. For example, if you want to save £8000 in 12 months, then create a midway checkpoint to measure your progress. That means by the end of 6 months. You should verify whether you have successfully saved £4000.
- The more action-oriented and attainable your goals are, the more motivated you will be. Make sure the action plan is easy to walk through. With a problematic action plan and unattainable goals, you won’t be able to save the desired amount within the set time.
- Opt-in for realistic goals that will help you become more confident in achieving them. If you are counting on winning a lottery or surprise inheritance, then you are entirely on the wrong track. Instead, plan for monthly, and yearly savings plan to make it attainable.
- Keep your focus on the time period. Without a deadline, no goals can be achieved. So, you must have a pre-decided timeframe that sounds realistic and help you stay focused. While setting the deadline, you must think through your entire objective.
If you take these shreds of advice into account, you can easily set your SMART financial goals that will fit your needs. This will even aid in identifying how far a long-term loan can consolidate the huge amount of debt you have.
Is Long-Term Loan Useful For Debt Consolidation?
As you have read earlier, debt can happen to anyone, anytime. With multiple debts and installments, it becomes hard for you to manage. That’s where long-term debt consolidation loans can help you out in Ireland.
Debt consolidation is a strategy that is useful in several different ways. Let’s take a closer look at what long-term personal loans can do for you –
- Low-interest rates – Long-term loans often come with low-interest rates. That means your monthly installments will be much lesser in comparison to short-term loans or credit card loans. No matter whichever credit score bracket you find yourself in, chances are that your interest rate will be still lower than what you are paying currently.
- Turns multiple payments into a single one – The idea behind a debt consolidation loan is to merge multiple installments into one repayment policy. So, by securing a long-term loan, you’ll be rolling various high-interest debts into a single payment.
- Helps to improve credit score – while speaking about credit score, one significant benefit of a debt consolidation loan is to give your credit rating a nice boost. You will likely see an increase in your credit score soon since your credit utilization rate will be reduced from now on.
- Can be paid off faster – All of you, who are on credit card debts, know that it takes an enormous amount of time to pay off credit card loans fully. However, the scenario is quite different in the case of long-term loans. One of the significant benefits of a debt consolidation loan is that it depends on multiple factors like your income, credit score, and your debts while establishing a sensible payback plan.
- Relatively less stressful – Among all other benefits, the best part is that this type of loan is less stressful than the others. Consolidating multiple payments into one repayment plan means you don’t have to think about different interest rates, tenures, and other relatable factors, making it less stressful.
Debt can make your life worse than ever. So, it is essential to address your long-standing dues as immediately as possible. Start by chalking out your financial goals, and then evaluate your status. If you think you cannot repay from your source of income, it is better to rely on a long-term debt consolidation loan. The details you can find here in the blog. Read through and quickly cone out of your exigency.