subject: Is Debt Consolidation the Solution? [print this page] If you find yourself swimming in debt, you might be thinking of considering TV ad offers that promise help through debt consolidation. Before jumping into a debt consolidation, it is best to know what you are getting into and see if this is the right solution to your financial dilemmas.
Debt consolidation is basically putting together all of your accumulated debts into one so you only have to pay a certain amount each month. Usually you put up a secured piece of property as collateral such as your home.
The danger is that if in the end you are unable to pay for the consolidated debt, you may end up losing your property.
You must realize that debt consolidation is not really going to lessen your debt, it will just extend it and it may take you many more years to pay it off the debts.
Before considering this as an option, try to look into your income and your monthly expenses. Do you use most of your income to pay for debt? Chances are you are always going over your budget.
Control yourself from needless spending, as this is the source of amassing debts. If you are not careful, debt consolidation may lead to even more debt.
Beware of companies that pressure you into their offers. Chances are these are fraudulent companies and will only get you into more trouble.
Banks that give out consolidation loans usually charge lower interest rates since they can deduct payments from your accounts with them.
Finance companies take on the risk of debt consolidation, but unlike banks, they charge higher interest rates.
Instead, you may consider a debt management plan or contact companies that specialize in this service. This involves working out a repayment schedule to work on eliminating your debt.
Just remember, that if something is too good to be true, it usually is. Try considering other options of paying for your debt before applying for debt consolidation.
If it cannot be avoided, remember to proceed with caution, you do not want more financial problems adding to your current ones.
