Is personal finance debt consolidation the answer?
When you're mired in debt, you may feel as though you're slowly sinking into quicksand. However, when this happens, don't make the common mistake of burying your head in that quicksand!
"Creditors have better memories than debtors;
and creditors are a superstitious sect,
great observers of set days and times."
- Benjamin Franklin |
Your immediate instinct may be to pursue debt consolidation, but without actually confronting the real problem of why you're in debt in the first place - and into debt way over your head - this may not help your situation at all.
The debt consolidation myth says that consolidating your debts and bills into one affordable monthly payment will solve all your money problems. But in actuality, unless you're making real changes to your spending and income, debt consolidation can and will make matters worse.
The key is to approach your spending head-on. That's where the real issue lies, that's how you got in this mess in the first place.
If you're spending too much, and saving too little - and thus burdened with bill and credit card payments you ultimately can't afford to meet your living expense and pay all your bills on time - you'll probably end up facing overwhelming penalty fees and interest payments that make those original purchases all the more frightening!
Your reaction shouldn't be to spend or borrow more money through new loans and credit cards, in order to be able to make the minimum payments on your existing debts. This is what is happening already in way too many American households - it's an endless spiral of debt that can quickly end in bankruptcy.
You may think that you're being responsible by taking a time out to do a little personal finance debt consolidation. But unless you're using this tool in tandem with others - i.e. sticking to a budget, spending less money, bringing in more money, etc - you'll find that hole of debt will merely get a lot wider and a lot deeper.
This is because you won't really be dealing with the debt. Instead, you'll be ignoring it, under the false impression that personal finance debt consolidation will do all the work for you. It doesn't, that's a big fat lie that the lending community tells you in order to encourage you to take on even more debt.
Personal finance debt consolidation only works if you also change your spending habits and practice paying your bills on time. Consolidating your bills and debts should only be part of the solution, because if your spending behavior doesn't change, you'll simply have more problems down the road.
So don't fall victim to the debt consolidation myth like so many others have. Look at debt as a symptom of the overall problem, not the problem itself.
If you can see your financial situation from this new angle, it will be clear to you that debt consolidation can be helpful, but only if used alongside other strategies and changes to your lifestyle.
"Who recalls when folks got along without something
if it cost too much?”
- Kin Hubbard |
|
Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
