Level up your bills: The smart guide to bill consolidation

Albert Einstein once said, "The only source of knowledge is experience." Going through the everyday challenges of life is how we learn. And there’s something to be learned from every situation. 

For example, looking at your desk or kitchen counter and seeing a stack of bills may be frustrating, but it's an excellent opportunity to explore solutions and gain knowledge. That way, the next time you're faced with a stack of bills, you can be confident that you have the situation under control. 

Here, we'll explore debt consolidation and learn how it could help you turn a stack of bills into a single monthly payment or at least cut down on the number of bills you pay each month.

To consolidate bills, there are a few steps. You’ll assess your debts, including how much you owe, interest rates, and monthly payments. Then you’ll be better equipped to weigh the options and figure out which is the best fit for your budget and timeline. The last step is to research lenders and programs.

What does it mean to consolidate bills?

Consolidating bills involves simplifying life by reorganizing how you pay bills, bundling payments, or using a consolidation loan to pay off existing debt. 

What types of bills can you consolidate?

Most bills can be consolidated, including:

• Medical bills. Consolidate outstanding medical bills from multiple providers.

• Credit card balances. Credit cards with varying interest rates are candidates for debt consolidation, including retail store cards.

• Recurring household bills. Utilities, insurance premiums, subscriptions, and home maintenance bills can all be consolidated.

• Personal loans. You could consolidate unsecured loans from credit unions, banks, and payday loan companies.

• Student loans. Both federal and private student loans can be consolidated into a single loan.

• Vehicle loans. You could consolidate auto loans as well as boat, ATV, and RV loans.

• Home equity loans or mortgages. If you have multiple home equity loans or mortgages, it may be beneficial to consolidate them (depending on the interest rate).

Ways to consolidate household bills without new debt

If your mind automatically goes to a debt consolidation loan when you think of bill consolidation, a loan isn't your only option. The dictionary definition of consolidation is "the act or process of joining things together into one." And that's what the following consolidation methods help you do—join multiple bills.

Bill management and payment apps*

If several bills have different due dates, it can be a challenge to keep payments straight. One way to make sure each bill is paid on time is to use a bill management and payment app. For example:

• Chronicle is a free iPhone®, iPad®, and Mac® bill organizer app. It's like your personal assistant, reminding you when a bill is due, allowing you to pay bills online, providing you with reports and graphs, and promising to respect your privacy and never share or collect your data. 

• 1Bill can be downloaded for free on iPhone and Android®. Like Chronicle, it has in-app bill reminders. The 1Bill app also makes automatic bill payments and even compares your current gas and electricity providers to others available in your area in case there’s a cheaper option. With 1Bill, you can group multiple bills and pay them off simultaneously. 

Bundling through service providers

If you've recently had internet installed, you may have heard about your internet provider's bundling service. Most telecommunications providers offer packages that include high-speed internet, streaming services, and a landline. Some even throw in wireless phone service as a fourth bundled item. 

It's not just telecommunications companies that bundle, though. You may find that your local electricity and gas companies bundle their services. 

Bundling is a great way to knock out several bills at one time, but it also comes with both pros and cons. 

Pros and cons of bill bundling 

Third-party bundling services*

There are also third-party concierge services that specialize in managing multiple bills from a variety of providers. For example, with a basic individual monthly subscription, SilverBills® will manage up to 20 payments per month for you.

While a bundling service could help you stay on top of bills, there’s a fee. How the fee is structured depends on the bill-bundling company. Some are subscription-based, while others offer tiered pricing based on the number of services bundled. You also want to keep an eye out for hidden fees, like integration fees, setup costs, and transaction fees. 

DIY bill organization

It's possible to set all of your recurring bills up on autopay through your bank—without spending a cent. Here are some of the advantages of autopay:

• You can set up automatic debit (also called autopay) and forget about it. No matter how busy you are, that bill will be paid each time it comes due. 

• Almost any bill can be set up on autopay, leaving you with few (if any) extra bills to pay each month. 

• Knowing your bills will be paid without any effort on your part leaves you more time to do the things that are important to you. 

• You can cancel autopay at any time. If you cancel a particular service or find it's no longer working for you, withdrawing from autopay is easy. 

When consolidating bills means consolidating debt

If the size of your balances leaves you as surprised as the number of bills you receive, you may be ready to consider a debt consolidation loan. A debt consolidation loan could make life a little easier. 

A debt consolidation loan works by combining multiple debts you're already carrying into a single new loan. Instead of paying each of those old debts separately, you’re left with one payment each month. 

Most debt consolidation loans have a fixed interest rate. You won't have to worry about the interest rate changing or your monthly payment increasing. 

Pros and cons of bill consolidation

Pros:

• Fewer due dates to track

• Reduces the risk of paying late

• Simplifies budgeting

• Could move variable-rate debt to a fixed-rate loan

• If you consolidate credit card debt, you could lower your credit utilization ratio and see a positive impact on your credit score

Cons:

• Won't reduce your total bill amounts

• Most people have at least some bills that they still have to pay separately

• After you pay off credit cards with a new loan, there’s a risk that you could run the balances back up on those cards

Steps to consolidate bills effectively

All it takes to consolidate bills is a little bit of organization and research. Here's how it works. 

List all your bills and due dates

Create a list of each bill, including the monthly payment and the due date. Don't forget to include semi-regular bills, such as HOA fees, insurance premiums, and property taxes. 

Identify bills that could be combined 

For example, maybe a stack of medical bills from the same doctor or medical system could be grouped together. Or, if you have more than one student loan from the same student loan provider, those could be good candidates for consolidation. Or, list all of your debts along with the balances and interest rates. You might want to look into whether you can get one new loan big enough to consolidate all of your existing debts.

Use a bill management tool or set up autopay 

Both a bill management tool and autopay could keep you on track by ensuring your payments are made in full and on time, even if you're away on vacation.

Consider a consolidation loan for larger balances 

Two popular tools for debt consolidation are personal loans and home equity loans. With a consolidation loan, you know precisely how much your monthly payment will be and when the debt will be paid off.

What's next?

Take stock

It's easy for bills to multiply while you're busy living your life. Sit down with all your monthly bills and figure out where you stand. Can your income cover your bills and you just need some help organizing, or is it a stretch to find the money each month to make on-time payments? 

Decide what you need

Only you can decide your next best step. As with any financial decision, weigh the pros and cons of each option. Sometimes it’s helpful to write down what you’re struggling with, and rank problems by number. That could tell you what’s most important to you and where you need to start.

Speak with a professional

If you're still unsure of the next best step, talk to a debt expert who can answer your questions and help you come up with a winning strategy. 

*Any mention of brand names and/or commercial products/services herein is solely for informational purposes. This article is not authorized, sponsored, or otherwise approved by the mentioned brands. Achieve is neither affiliated with nor endorses the use of these brands or their products/services. Any trademarks used are the property of their registered owners.