Does Debt Consolidation Help or Hurt Your Credit?


If you’re struggling to make the minimum payments on your debt, missing due dates and not making any substantial headway in the process, you’re credit score likely already mirrors your situation. After all, these three numbers are supposed to be the quickest snapshot of your financial health and ability to repay creditors.

Debt consolidation may be an option you’re considering in order to regain some solid footing, but it’s important to note how this move can impact your credit worthiness and score. Will it lend a helping hand or kick you when you’re down? When you’re ready to give debt consolidation serious consideration, be sure check out ReadyForZero’s debt consolidation tool.

It depends on a variety of factors. Here are a few.

The Type of Debt Consolidation You’re Considering

While the basic principle behind debt consolidation – taking debts and combining them into one, hopefully more manageable debt – is essentially all the same, there are different ways to go about it.

Debt consolidation through a debt relief company or bank usually entails this third party negotiating for lower payments or rates on your behalf, sometimes capitalizing on relationships they have already established with your creditor.

If credit card debt is what you’re struggling with, then this type of debt can be consolidated through a balance transfer onto a new card with a low APR, or perhaps a 0% APR during an introductory period.

3 Questions to Ask Yourself Before Pursuing Debt Consolidation

Debt repayment

Bills can spur a great deal of anxiety – especially when they represent a seemingly insurmountable pile of debt.

If you’re struggling to make payments to multiple creditors at various amounts on different dates throughout the month, you’re likely feeling the pressure. Debt consolidation and the promise of wrapping each debt into one predictable monthly payment might seem like the perfect solution to your potential financial burnout. And for some, it can help a great deal.

But financial stumbling blocks like these don’t always have a one-size-fits-all solution and may require some careful deliberation on your part. Before you head down the debt consolidation path, make sure to ask yourself these questions.

If you do decide to try debt consolidation, be sure to check out the ReadyForZero debt consolidation tool.

Question #1: Have I addressed the underlying issues that created the debt?

First and foremost, have you stopped the financial bleeding that caused the debt in the first place? If, for instance, credit cards are your kryptonite, have you stopped charging? That is step #1.

In the majority of cases, sizeable consumer debt is created over a long period of time and is really just the physical symptom of a pattern of bad habits and emotions that haven’t been attended to.

Top 5 Best (Free) Spreadsheets for Paying Off Debt

laptop and coffe

When you’re in debt, it can feel confusing and overwhelming – as if you’re trying to find your way out of a huge maze with ten-foot walls and no map to guide you.

Luckily, the first step to getting out of debt is to give yourself a map. And that starts with using some kind of spreadsheet or tool to organize all your debts so you can see what you owe and create a plan for paying them off.

Now, if you’re a longtime reader of this blog, you’re already aware of a more high-tech solution than spreadsheets, but in this post we’re first going to look at the best of the traditional spreadsheets and then discuss other options, including ReadyForZero, at the end of the post.

So let’s take a look at some fantastic maps that can help you conquer debt!

7 Debt Repayment Tips from Someone Who’s Been There

Debt repayment

When I graduated (as a newlywed) with a four-year degree, I also graduated with maxed out credit cards, student loans, and an auto loan. After two years of working, I had paid down some of the credit card debt, but a cross-country move and grad school ran the credit card debt back up, and added more to the student loans. I even ended up with more debt as a result of not being prepared to pay taxes with my home business. If there was a way to do it wrong paying for things, I probably did it.

My situation has improved since then, thanks to the efforts my husband and I have made to change things up with our finances. Here are 7 debt repayment tips that can help you move forward:

3 Fast Ways to Compare Student Loans Using Excel

Excel spreadsheet

This is a guest post by Kaitlin Butler of CommonBond.

While there are a lot of great loan calculators out, it can be hard to know where to look when you just want to understand how much you’re going to be paying for a student loan. If you’re starting to shop around for loans, you may want a general picture of how much you’re going to pay, and if you’re refinancing your existing debt, you may want a tool to compare your options based on how far you’ve already come with repayment. Either way, check out these simple Excel formulas to compare different student loan options in just minutes.

When Should You File Bankruptcy Rather than Pay Off Your Debt?


Few financial words sound scarier than “bankruptcy.” And for good reason. Declaring bankruptcy is extremely serious, and it shouldn’t be anyone’s first course of action when dealing with money problems or debt.

But for some, this action could provide a solution to serious debt situations. In extremely simple terms, you can file bankruptcy when you owe more money than you can afford to repay.

Of course, the process gets complicated. Only a select group of individuals will find this option feasible, and you should only pursue this course after learning more about what happens when you file bankruptcy instead of paying off your debt.

That being said, let’s dive into this issue to better understand if it’s the right path for you and the debt you hold.

How to Audit Your Life for Potentially Money-Draining Relationships and Behaviors


If you’ve ever had a heated argument with a significant other about an unplanned purchase, secret debt, spending habits, or any other money-related topic, you know the impact that finances can have on a relationship. In fact, studies continue to show that the strain of financial incompatibility can be hugely detrimental to a marriage, often times ending in divorce.

It makes sense that money issues would arise in the process of running a household with someone who might have different habits and priorities than you. The truth is, however, money is so engrained in our physical and emotional life experience, the state of our finances aren’t just impacted by a marriage. They are impacted by a variety of relationships, behaviors, and life forces we may not even be aware of.

Being firmly in control of your financial picture sometimes means taking a hard look at these things that might be placing unnecessary strain on your wallet and, in turn, your well being.

Here are a few things to look for:

How We Got Out of Debt While Beating Cancer

Andres and Christina

This is a guest post by Andres and Christina. They have a very unique story to share. See below!

We were living a “normal” life when it happened, out of the blue.

Steady jobs, a nice rented apartment in San Diego, world travel as often as possible, friends, family – oh, and some debt!

Needless to say, cancer wasn’t part of our plans for 2012.

But there we were, 32 years old, in a doctor’s office being told Christina had cancer: stage 4 Hodgkin Lymphoma, to be exact.

Our first concern was Christina’s health. It was a scary time as we had to grapple with questions like, How serious, how life threatening is this? What happens next? What are the treatment options?

As the reality began to settle in around us, we realized that, when dealing with cancer, it’s not just your health that you need to worry about.

Cancer can wreak havoc on your finances, too.

Even if you have great health insurance, cancer still requires major unforeseen expenses. And sadly, many cancer patients forgo scans, skip medications, delay treatments and/or incur astronomical debt (a side effect known as financial toxicity).

Fortunately, we had done two things in the previous months to help prepare ourselves for such a potential catastrophe:

1. We had begun to dig ourselves out of debt in an effort to become financially free.

2. Thanks to some very fortuitous foresight, we had upgraded our health insurance plans.

Thanks in great part to these two little decisions, we were ultimately able to get through two consecutive bouts of cancer, and come out on the other side with zero debt – and the inspiration to start our own businesses and travel the world.

Here is how we did it.

Learning to Think of the Future “You” and His or Her Financial Needs

Future you

Typically I spend my days in wonderment about how much I love my work. My sheer desire to do what I do for a living makes my job in many ways very easy. After years of working jobs I hated, this feeling of fulfillment is something that still takes me by surprise.

However, no job is without its challenges. And the job of writing about personal finance comes with two very unique challenges:

  1. Remembering to keep in mind that not everyone spends their days wrapped in the world of personal finance

  2. Taking my own advice

It’s funny how the more time you spend with a subject, the more removed you can get from it. How that relates to finance is the idea of how easy it is to dispense financial advice….and how hard it can sometimes be to turn that advice into action.

In other words, the advice I give is sometimes easier said than done.

Though I try to make that clear in my writing and not give the perception that I think these changes are all very easy to make, what you don’t see is how many attempts and failures I’ve gone through to implement these tactics into my daily life. The fact is, maintaining good financial habits is a daily effort – for everyone.

So when I think about maintaining the daily effort myself, the question I have to constantly answer is why. Why do I have to skip that second coffee of the day – even when I’m really tired and need to get through the workday? Why do I have to say no to a lunch or dinner out when I really don’t want to eat what’s in my fridge? Why can’t I take a trip to Macy’s when I want to try something new – or even after the third button in a row falls off my Fall coat?

The answer to all these questions is: because splurging on these things now goes against the needs of my future self. Sure, they’ll all make me feel better right now…but at the end of the month I’ll feel a lot differently after reviewing my bank statement. When I see the missing money, I’ll think about how I could have brewed that second coffee instead of bought it, how I could have eaten what I had at home, how I could have created new outfits with my existing wardrobe, and how I could have just sewn those buttons back on my coat myself (or taken it to a tailor – which is still cheaper than a new coat).

In short, the present me wants everything NOW. But the future me wants to think purchases through and see if there are ways to spend my money more wisely rather than going willy nilly with every whim. So the only way to truly stick to my good financial habits is to always be considerate of the future me.

One Couple, One House, Two Kids, and Almost $40,000 of Debt Paid Off: How One Family’s Hard Work Helped them Reach Success

Christian and Laura
Total Debt Paid Off: $40,000
Months using ReadyForZero: 19
Accounts paid off: 4 of 4

“The fact that we made the amount of headway we were able to in a year is awesome. We couldn’t have done it without the help of friends and family.”

When I was a kid, I was obsessed with milestones. I remember my excitement over nearing my “pre-teen” years, reaching my teen years, then high school. I imagined college, moving to another city, and… getting rich and buying my parents a house on the beach.

A lofty goal to be sure! But when I thought about measuring what success would look like as an adult, I decided that “making it” would mean giving my parents a home (before you think I’m too altruistic, keep in mind that I fully intended to buy myself a house on the beach as well). Years later, I now realize that “getting rich” isn’t a goal – and that there are unlikely to be any beachfront houses in my future (thanks in part to my habit of living in very expensive cities).

As lofty as my early goals were, it’s not out of the ordinary to view homeownership as an important milestone in adulthood. I even remember learning in high school that the “American Dream” was to have a house with a white picket fence and 2.5 kids. Unfortunately, the current rise in debt (especially student loan debt) is stealing this American Dream for many. But not everyone’s! Read on to learn about one couple who fought debt while working to achieve their dream of homeownership… and are well on their way to those 2.5 kids!