How to Invest







Debt Consolidation is not for Everyone

Debt consolidation is a solution to managing your debt with an underlying simple principle: One lower monthly payment is much simpler and easier to handle than many payments on many different credit cards. But debt consolidation is not for everyone yet it appeals to a large group who may have no business using it. There are some people for whom debt consolidation is not even near a solution to the problem. These are people who take out a debt consolidation and then turn around and charge up their credit cards again.

In this case debt consolidation was not a solution but a bandage to it - only patching it up temporarily. Many people go out for a debt consolidation because they believe this is the only way out instead of bankruptcy. The situation in which they find themselves leads them to make desperate decisions and not take the time to think out the problem and study all alternatives. Getting a debt consolidation loan should be considered with the same detail as making any other major purchase such as a home or car. You must shop around. If shopping around is not your cup of tea then it would be wise to stay away from debt consolidation because you may get scammed.

Also, pay close attention to how much this debt consolidation will cost you in the end. Think about it. You might be buried in a mountain of unsecured debt (credit cards) where there is potential for renegotiation of those loans in some cases but nonetheless they will cost you a certain amount in the end. Then there is the debt consolidation loan where you probably will put you home down as security and if you make it to the end you might have paid more than had you just tried to deal with the credit cards. This goes back to doing your homework. Another reason that debt consolidation may not be for you has to do with the "grass is not always greener on the other side" principle.

When a person is in a difficult debt situation for whatever reason, it almost like being in tropical ocean waters with a wound that draws the sharks. Most of them are just that: sharks. Remember to always follow the money when analyzing the motives of others.

You will in most cases be right about your suspicions. Many debt consolidation businesses are exactly the sharks you want to stay away from as they have ways to hide all of the facts about how much a loan will actually cost you, have poor customer service, or resort to high pressure tactics to get you into a loan situation that you cannot get out of and will make your life a nightmare. It might be just as well to stay in place and try to work out payment situations with your creditors and negotiate with them before getting yourself into an additional burdensome debt situation. One thing to remember is that when you are in a situation with a lot of unsecured debt be it credit cards or medical bills, there isn't really much the creditors can do to you but use underhanded tactics to harass you. If you have every sincere intention of paying your debt it might be better to weather the storm with the unsecured debt then get into a situation with a consolidation loan where others can take your property should you go down on you luck again.

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