There is a basic rule of thumb for consolidating debt, and it's a rule that most people aren't willing to follow.
All too often those in debt want to ignore the real problem at hand and invest in a debt consolidation home equity loan or something like it, hoping that it will solve all of their problems without them having to lift a finger to address the real issue behind the debt.
"When a man is in love or in debt,
someone else has the advantage.”
- Bill Balance |
However, the reality is that debt consolidation is merely one method for reallocating your finances. It's NOT a quick fix!
It's never the overall solution! Consolidating debt can indeed be accomplished with great results, but it will require you to re-think your spending habits and make drastic changes to your budget and lifestyle until you able to free yourself of the debt completely - and living debt free should be the ulimate goal.
Essentially, you have to ask yourself how you got into debt in the first place and then take the steps to prevent yourself from getting into it again. This means that when consolidating debt, you must close all of your old accounts and never use them again!
Yes you CAN do this - it doesn't mean the end of the world, it just means the end of living in debt up to your eyeballs.
Addressing your spending and savings habits are indeed a requirement if you want to say goodbye to your debt. Otherwise, your plan for consolidating debt is just another short-term bandaid on your debt problem.
How do you prevent being in a situation where you need personal debt consolidation? Avoid buying on credit like the plague - it only traps you. You might get some instant gratification by purchasing that expensive car you've been checking out for months, but ultimately if it only leads to needing credit card debt consolidation, it's just not worth it.
Spend only the money you have in hand - not money you wish you had or hope to have in the future. This advice doesn't sound so radical, does it? And yet the average American is thousands of dollars in debt and their financial future is thus out of their control and their self-esteem is being crushed from their guilt, fear and worry.
Instead of spending frivolously, why not save your money and invest it into your future? Instead of buying a product with a loan that costs more than the product itself, why not save your pennies until you can afford the product upfront?
Don't spend every last drop of your income every week - instead, put some of it aside for later; let it grow in an investment account. These basic habits of financial planning and budgeting take time and effort to master but once you see the rewards - both physical and emotional - it will be hard to sign up for another credit card ever again. If you decide today to make financial success your business, debt consolidation won't ever be an issue.
In essence, exercise restraint. Your self-control today will literally pay off tomorrow. If you want freedom over your life, you need freedom over your money. And you will never achieve that if you are constantly indebted to banks, credit card companies, cash store owners or a debt consolidation lender.
So as you're consolidating debt, remember that it will take a lot more than just doing so to improve your finances and ultimately your life.
While it might be a real adjustment to change the way you spend and save money today, it will quickly become the only reasonable way to live your life to ensure a successful financial future.
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"Never spend your money before you have it."
- Thomas Jefferson |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
