If you’re in financial trouble, your first inclination is to cut up all your cards and close the accounts, stop all subscriptions and promise yourself that you’ll eat in house only.
Yes, these can help, but it’s not what you should do per say. In fact, most financial experts agree that you need a more detailed plan. The biggest strategy in tackling debt is debt consolidation, which rolls several debts into a one, more management debt at a lower interest rate.
Seattle University’ Albert School of Business and Economics Associate Professor Mathew Isaac said debt consolidation is powerful psychological because getting out of debt feels doable.
However, this is not the solution for everybody to undertake. Consolidation is ideal for people who have high-interest rate debt like credit cards. According to personal finance wallet NerdWallet, households with credit card debt had balances that averaged more than $16,700.
National Consumer Law Center attorney John Rao said anybody who has a plethora of income and not enough income should use bankruptcy over debt consolidation to resolve their debt problems.