Debt Consolidation ? Is There A Downside? | Ficcoes

October 13th, 2012

Now what can be the disadvantage of a loan that promises to help you repay all debt and be debt free within a specific span of time? Add to this rosy scenario the fact that this loan could also have a lower rate of interest than most other loans and probably you would grab at such an opportunity, is it not? But a debt consolidation loan, which is one of the ways in which an individual can deal with debt relief is something that should be decided upon very carefully indeed. There are a few advantages and disadvantages to opting for debt consolidation and armed with the right kind of information, you can make the right kind of choice.

One of the biggest opponents of debt consolidation service is Dave Ramsey who states that debt consolidation is only a ?treatment of the symptom?. Ramsey is also against the fact that debt consolidation seems to be a quick and easy way out of debt and even goes to the extent of calling it a ?con?. But this statement merits a bit of examination. It is true that debt consolidation seems to be an extremely convenient way of getting out of debt. A company offers you a lower interest rate for a loan that can help you clear all your other loans. Unfortunately, there are no easy ways out of debt.

For debt consolidation to work, it is necessary to change the lifestyle habits that caused the debt in the first place. Especially when these lifestyle habits are about overuse or misuse of credit cards and simply living beyond one?s means. There is no doubt that the debt consolidation company will make money off a person availing their services but the truth of the matter is that nothing comes free in this world. Even after applying for a debt consolidation loan, you will have to keep a close watch on expenditure.

One of the biggest problems that happen for a person who has had a successful stint with debt consolidation is that there is huge temptation to use the credit card again, especially after the card has been cleared of all pending payments. So if one is going to go back into the cycle of excessive credit card usage and fall back into the debt trap, then a debt consolidation loan is simply not going to help. The best of debt consolidation loans will give you lower interest rates than whatever is being paid towards old debts.

To help the process along here are a few things that one can do:

• Rein in your expenditure ? this includes credit cards, non-essential purchases and any other expenditure that is non-essential such as? eating out.
• Keep a careful watch on credit card use ? cutting up a credit card actually has its uses when one is trying to finish up clearing of all debt.
• Maintain self-control. This may sound simple enough but consider this statistic ? Bankrate.com states that 70% of the people who availed a debt consolidation loan went back into the same or higher debt within a span of 2 years.

?

This entry was posted on Saturday, October 13th, 2012 at 12:44 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Source: http://www.ficcoes.net/debt-consolidation-%E2%80%93-is-there-a-downside/

susan g komen kenyon martin kenyon martin big miracle slab city super bowl snacks appleton