Debt Debt Consolidation sometimes referred to, as bill Consolidation is something that comes up in the mind of most people in debt. Basically what consolidation does is to simplify ones’ finances and helping ones’ cash flow by giving one payment instead of several. It must be noted though that this only works when one is disciplined in avoiding taking additional debts.
Bill Consolidation enables one pay off all or many of ones’ debts and start fresh with a new one. In the case of credit card debts, one consolidates by transferring all one’s balances to the new account; Experts highly recommend that a credit card offer that allows you do this should be accepted
The problem with Consolidation is the false sense of accomplishment it gives one. Nobody can borrow his way out of debt and as such consolidation loans do not eliminate debt. The best it can do is to make your debt easier to pay off. It can also make you buy more time. Rather unfortunately, studies do reveal that 80% of people who consolidate loans end up in deeper debt distress than they were in before. It is not advisable for Home Equity loans to be taken as consolidation loans because there is no sense in putting ones’ home in jeopardy when there are less risky ways of getting out of debt.
Experts seem to agree that consolidation loans work best for those who though in financial danger, are not yet in distress. Families in distress most likely won’t qualify for a consolidation loan until they make a major lifestyle changes which would break the patterns that created the debt distress in the first place (Please see my previous article “how to stand on your resolve to be debt free”)
So you wear the shoes and you know where it pinches. Consider the options, the advantages and disadvantages, then ask yourself the question: Is Debt Consolidation the Way to Go?
