Skip to content

Are Debt Consolidation Companies Good For You?

April 10, 2010

There is no such thing as a magic wand tat will eliminate your debt.  It sounds good, but just doesn’t exist.  I know you’ve seen the headline “Eliminate Your Debt Today”, but if you didn’t make all the debt in one day, there is no way that you’ll get out of it that quick either.

In the midst of a recession and debt at an all time high, it’s easy to see why some would gravitate to promises of being debt free.  The best advise I can give is “Consumer Beware”.

Debt consolidation is way to roll all of your debt into one neat package where you receive a loan that will pay off all the debt you include and provide you with one monthly payment.  Sure it’s easy to make one payment instead of multiple payments, but at what expense.  Consolidating usually lowers your monthly payment on your debt, sometimes by providing a lower rate to pay, but more often than not it’s by stretching the loan term out to infinity and beyond.

For some this is an easy way to control the debt, but for most they don’t change their spending or savings habits, thus falling into the same patterns.  It takes discipline to get out of debt, something that most people just don’t have.  It’s a lot harder to get out than it was to get in, but it’s not impossible.

Here are a few things to remember.

Don’t

  • Become a prey to telemarketing, email and spam tricks. When you become vulnerable to these kind of trick the tricksters bombard your email box all sorts of emails and spam that are hardly of any use to you.
  • Disclose your confidential data especially the social security number and the email passwords only when you are sure that they are not going to be misused.
  • Forget that You should also be aware that you may end up paying more total interest if you use a debt consolidation loan.
  • Sign up unless you are sure you can make the monthly payments
  • Use the newly available room on the credit card.

Do

  • Get references and recommendation about the debt consolidation company whose credit card debt consolidation program you are going to avail.
  • Be sure that multiple debts cannot be rid off overnight; it is going to be slow process extended over a prolonged duration.
  • Understand that all these programs do is shift your debt
  • Use a debt consolidation program to manage various high-rate revolving debts.

How to Find the Best Debt Consolidation Programs

There are a variety of choices, and you should shop around to find one that fits your needs. If you need some ideas on where to start, try this plan:

  1. Local credit unions or banks that you already have a relationship with. These are reliable sources that are likely to give you a fair deal.
  2. Banks that you don’t already have a relationship with. They might offer you a good deal in order to win your business.
  3. Mailers offering debt consolidation programs. These lenders already want your business – they’ve mailed you an offer because something about you fits into their desired profile. Only work with a reputable institution that you know you can trust — some junk mail can get you into a bad deal. If you’ve never heard of them, watch out.
  4. An internet search for “debt consolidation”. Just be extra careful with anything you find.

“Change your mind, change your life”

Advertisements
3 Comments leave one →
  1. April 19, 2010 4:12 pm

    These are dificult times. There is some great advice on the site. The most important thing is to get some help and not bury your head in the sand.

  2. September 16, 2010 12:12 am

    Great info on your blog for Debt Consolidation. If more people would visit blogs like yours and mine then more people would be in a more comfortable financial situation. The info is out there and most are free, they just have to look!

    • September 20, 2010 1:10 pm

      Thanks! That statement is so true! I’ll definitely check your blog out. Thanks for stopping by.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: