Debt Consolidation – A Real Benefit or Nasty Curse?
Debt consolidation, which sounds like a fancy and complicate idea, is really a very simple thing. Debt consolidation, in its lowest form, means taking all of your high interest consumer loans (credit cards, etc.) and placing that debt into one lower interest rate loan. Not complicated at all – right. Well, not on the surface.
Debt consolidation sounds like a great idea that should be done at every possible turn – in order to save you money. Not so fast – like everything else in life, there are pros and cons to debt consolidation. Here are just a couple of them.
- Hire a Debt Consolidation Company, or do-it-yourself? For pure convenience, hiring a debt consolidation company would be the best option. For a fee (sometimes a rather large fee) these types of companies will analyze your financial information, then recommend ways that you can save money by taking out a new loan to cover your debt. Sounds simple – right? Yes, but would you really be getting the best deal? Saving the most money? Doing what’s really in your best interest? Well, in a word: no. Debt consolidation companies do not have your best interest at heart – they’re looking for the biggest profit they can make. And if they can save you some money too – great. But, no matter what they say, you are definitely not numero uno! My recommendation is to consolidate your debt yourself. Find a great book on debt relief, talk to an accountant or a tax lawyer. Ask others who have been through this what they did. In short, you need to educate yourself. This is not terribly complex – the basic idea is very straightforward. Just remember – at the end of the day, for debt consolidation to work , you need to see real savings. Monthly savings and long-term savings.
- Is Debt Consolidation a real long term solution? The answer to this question is a definite maybe. A “yes” answer hinges on your financial maturity and willingness to change your spending habits once the credit cards are in the clear. The absolute worst scenario is one that you place all of your debt into a low-interest rate personal loan, but, keep spending on the credit cards just like before. Mentally, some will see credit cards with no balance and assume they’re rich – and spend like there’s no tomorrow. Soon, their debt level is so high there is no hope of recovery – just the ugliness and shame of bankruptcy. While others will sober up and change the way they spend money – living beneath their means, cutting up the credit cards and setting up a budget with the goal of never placing themselves in financial danger ever again. In this instance, debt consolidation is a good thing.
Last 5 posts by admin
- 5 Simple Tips to Wipe Out Credit Card Debt Without Filing for Bankruptcy - November 10th, 2011
- Can't Make Your Credit Card Payments - What's Next? - October 4th, 2010
- Informal Bankruptcy To Eliminate Credit Card Debt? - September 28th, 2010
- Avoiding Bankruptcy & Eliminate Credit Card Debt - September 21st, 2010
- Phone Calls From Debt Collectors - September 15th, 2010
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
- Tags: Add new tag, Debt Consolidation
September 1st, 2010 at 5:55 am
The information you have on this article has been interesting to follow , I was surfing for facts concerning loans and got preoccupied. Which is a delightful incident as I would on no account have found this post. The majority of blogs I read it seems that the journalist has hurriedly posted a quick hundred words without to much thinking. nevertheless I have found your prose not only attention-grabbing to read but moreover effortless to read and comprehend. Anyway thankyou for taking the time to carry out some fascinating research and compose it in a way that a simpleton like me can grasp.
January 28th, 2011 at 4:34 pm
~.: I am really thankful to this topic because it really gives great information `-;