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Home Debt Consolidation Debt Consolidation – what does it really mean?

Debt Consolidation – what does it really mean?

Debt consolidation is the reduction in your monthly payments by means of putting several or all your debt into one payment.  You typically borrow the money and pay off all your debt and then start payments on your new loan.  But be careful, because it is very well known in this industry that up to 70% of people who go through a debt consolidation program get back into debt within 3 years.  So, Houston, before you take this path ask yourself what are your actual goals?   All things considered, when you’re knee deep with big debts and your credit standing is below ideal, home mortgage lenders will probably charge high interest rate if they are to lend you money anyway to do a consolidation.  Debt consolidation does also benefit people psychologically because they fill as if they are getting out of debt – they are taking 5 different loans and are left with 1.  Not only that but there 5 other credit cards now have available credit on them.  Hmmm… you see how 70% of Americans fail this program?  What did they change about their habits before getting involved in this? Yes it is true, when you have just a few monthly bills to repay, you may budget less complicated, and people avoid totally wasting grueling hours calculating out the effects of different rates.  But, this is just crutches to ease the pain, the problem has not been fixed.

Debt consolidation reduction does not fix poor spending habits. In addition, debt consolidation doesn’t always work as planned. If you get involved with a modest lender who quickly scans the business or travels your bank loan along to your less compared to scrupulous vacation, you may find yourself within legal in addition to financial heavy water. In addition, a consolidating debts initiative may not always lend to your account at the best interest price.  Often, debt is a great obstacle, indebted individuals must be able to budget as well as quit spending. Often, debt is a great obstacle, indebted individuals must be able to budget as well as quit spending.  Getting out of debt does not work overnight it takes planning and time to get a well thought out plan together before getting out of debt.  And if you know that a certain path leads to a certain result and you are not looking for that result than don’t take that path!  Debt Settlement is a great way to reduce you debt by less than half of what you currently owe, you will not be establishing new credit while you are in the program, and if you work with a reputable company they will help you establish your credit quickly when you are done with the program.  SO make the right decision, but make it wisely.   Remember the old saying “if you give a man a fish he will eat for a day, if you teach him how to fish he will eat for a lifetime” , this is very true even when talking about your debt, so go out there with confidence and a plan and financial freedom will be yours!

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