What to Do After You Get a Debt Consolidation Loan

Once you obtain the debt consolidation loan and get your credit cards paid off you can breathe a sigh of relief. If your credit card accounts were still current then probably not much changes for you other than more simplicity in paying your bills. However if your credit card accounts were in arrears and you were getting calls from their collections departments then things are probably pretty peaceful now because the telephone stopped ringing. If you fell into the last example (credit cards in arrears) then now is the time to make new personal finance commitments after your debt consolidation loan. These commitments are designed to keep you from ever getting overwhelmed in debt again.

Save for at least 3 months of sustainable income. Or save for 2 months. Or save 6 months. The point is to save so that you do not have to reach for the credit cards if you have a job loss, emergency medical expenditure, or some other incidental like an emergency root canal or your child needing glasses.

Analyze expense areas where you can cut back. Remember that the idea is to save. You now have a lower monthly payment after your debt consolidation loan so combine that with reduced expenses and you have some real disposable saving income. Look at where you can turn variable expenses into fixed expenses (much like what you did when you obtained a debt consolidation loan).

Set up a budget. When you establish a budget and stick to it then saving will be much easier. The fact that your debt consolidation loan now gives you a fixed payment makes it much easier to budget too.

Keep track of your credit report. If your debt situation was bad then you need to get a copy of your credit report from each of the three reporting bureaus: Equifax, Experian, and TransUnion. Take a close look at the status of each of your accounts. Credit card accounts are either going to be still with the original creditor or sold to a collection agency. The important thing is that you need to get an assessment so that you can start repairing your credit. Don’t pay credit repair companies. These are things you can do yourself. The fact that you are reestablishing a good payment history is the best credit repair there is.

Don’t run up the credit cards again. Stop using your credit cards to supplement your income. Remember that you probably will not be able to get another debt consolidation loan if debt gets out of hand after the first one. Put the credit cards under ice in the freezer if you have to. Close some of the high interest accounts if you can too.