TRUTH SYRUM: Consolidating debt doesn't solve overall problem
Posted By: Matt in Credit on 03/21/2014 at 10:38:01
Debt consolidation often is viewed by those struggling to make monthly payments and ultimately dig themselves out of their financial hole as the means to an end, a way to trim interest rates and pay off balances faster than the snail's pace they're following.
So is debt consolidation actually a smart move·
The answer to that question truthfully isn't yes or no, but rather can be looked upon as a simple "wash" when it comes to conquering your goal: getting out of debt.
Debt consolidation is the equivalent of moving your car from one parking space that is five miles away to one that is two. Your car is still parked, but maybe you've changed your outlook but not your overall standing.
Debt consolidation is the same in that you may lower your payment, pay less interest, but the debt still exists and is perfectly intact. Furthermore, that lower monthly payment might translate into essentially just paying on the loan or loans for a longer term.
That's one of the fancy ways debt consolidation companies waive their so called magic wand and tell you that you're paying $1,000 now and they can cut that chunk in half. Keep in mind that you're not actually losing the actual debt, and make sure this consolidation company isn't just stringing along your struggles for more years.
Debt is debilitating, and can wear on your psyche and physical wellbeing more than you think. Carrying around this burden might be keeping you from enjoying just about anything that's going on in your life, and ridding yourself of it is paramount on your list of things to do.
But you shouldn't make a lateral move financially in the process.
Debt only goes away by paying off what you owe by using your own money. That might not sound like the quick fix advice you want to hear but that's only sound sentiment moving forward. The same contingency that wants to lose weight but not exercise carry the same mentality as those who want to get out of debt but not change how they're spending money or budgeting.
It just doesn't work that way, no matter what the endeavor.
The simple art of sitting down and writing out your expenses versus your income, establishing how much, if any, you have left over and then cutting or saving accordingly is the only path that won't produce more headaches or leave you spinning in neutral from a budgeting standpoint.
There's nothing inherently wrong per say with debt consolidation, as long as you, the consumer, don't view it as racing through the finish when you're actually miles away from where you technically want to be.
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