So, what is “Debt Consolidation” anyway?

Hello, and welcome to another installment of, “What does all of this financial stuff mean?”.

Today we’re going to discuss the root of what we’re all about: debt consolidation. So, what does it mean to consolidate your debt? Should you do it? Let’s take a look.

The Basics: Consolidating debt is simply the act of lumping all of your debt together into one monthly payment. Of course, the balance of this combined loan would have to equal the sum of each individual loan. Consolidating your loans, therefore, does not mean that the big, scary number that you owe will change, but when they are all combined into one loan, the interest rates will be lower. The difference between consolidating student loans and regular loans, however, is that with student loans, it is incredibly difficult to extricate yourself by declaring bankruptcy, so the government can garnish your wages if you cannot keep up with the payments.

Like all things, you should carefully consider your options when deciding whether to consolidate your student loan debt, but in the long run, it can remove a lot of unnecessary stress from your monthly repayments.