Lesson 11: In our ongoing Wealth Wisdom video series, we’ll teach you financial fundamentals. In this eleventh lesson, Terry Kuykendall, a budget analyst for the military, will explain how debt consolidation works:
Here is the summary of how debt consolidation works described in the video:
- The first step is to find a lender who is offering a lower interest rate than what you’re currently paying.
- Next, tally all the bills you want to combine into a consolidated loan, and borrow only that much, no more.
- Debt consolidation loans reduce your monthly payments because you’ll have a lesser payment at a lower interest rate.
- The last step is to destroy your credit cards to prevent you from using them again once your finances are under control.
- Debt consolidation can be a good way to eliminate your debt without filing bankruptcy.
Learn More: If you think debt consolidation is the right option for you, here is some information on How To Evaluate Debt Consolidation Companies.
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