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Debt Consolidation to Reduce your Interest Expense

It is the time of the year again, Christmas is coming. A lot of people are gearing up for that special moment by swiping their credit card to purchase the many beautiful gifts to be shared between friends and families.

In the 2017 Federal Budget, treasurer Scott Morrison mentioned that good debt involves borrowing money to pay for an asset that is going to add value or provide future benefits, whereas bad debt consists in borrowing money to cover the cost of something that won’t give the same kind of long-term value.

Debt consolidation benefit
A practical example of the benefits of debt consolidation

It is one thing to incur debt which gives you temporarily happiness, but it is another thing when that debt incurred a high-interest expense, and there are ways to reduce it, but you are not spending the time to bringing the unnecessary interest expense down.

Most of the time, people become complacent after getting the home loan and left the home loan document in the drawer to collect dust. They never spend the time to review their home loan to see whether the interest rate can be reduced to save dollars of the repayment. Yes, it is agreed that home loans are often considered to be good debts. Yes, buying property involves borrowing a high amount of money and can affect people’s budget. But a home loan also makes the borrower the owner of the property, and they can convert the rental payment to the landlord as a repayment to bank hence they have the possibility of owning the house free of mortgage one day.

The process of converting bad credit debt to a good credit debt is part of the process of debt consolidation. The outcome of a good debt consolidation exercise will mean that you will be able to save up to thousands of dollars off the interest expense.