3. Ignore New Purchasing Power
While working hard to consolidate (and ultimately pay off) debt, it can also be tempting to start spending again. Once balances and monthly payments are combined, more money is generally available in the budget. Rather than simply combining debt for the purpose of making payments more manageable and freeing up cash, it’s important to use any leftover funds to make extra payments, pay down on principal, or pay off another account.
Putting more money in the bank may give you peace of mind, but it doesn’t make much sense if the interest you earn is lower than the rate you’re already paying for debt.