www.alifeoutofdebt.com - For people the lure of easy credit has
taken them into the credit card debt. Between debt on regular
credit cards, shopping store credit cards, home equity lines of
credit, mortgages and car payments it's no wonder consumers are
finding themselves financially and emotionally drained as they
float in a sea of debt.
At a time like this with debt continuing to mount the decision
to use a debt consolidation loan may seem like the smart thing
to do - or is it? Certainly the top financial priority should be
to pay off all outstanding debt. Unfortunately figuring out how
to do this and which debt to pay off first can be difficult at
best and even lead to more financially related stress.
This dilemma is common among consumers struggling to eliminate
debt in order to regain their financial sanity. A debt
consolidation loan can be an easy answer to solve the current
financial strain brought on by a large outstanding debt amount
but it may not solve the long term issue. The reason is because
many consumers obtain a debt consolidation loan and correctly
use it to pay off their debt. Unfortunatly suddenly feeling good
about their new found financial strength they make the mistake
of using their credit cards again and again and again -
essentially repeating the blunders that got them into trouble in
the first place. Compound that with the fact that they now also
must pay off teh debt consolidation loan they orginally got in
order to relieve them of their initial financial burdens. This
is a classic example of where using a debt consolidation loan
could lead to more harm then good.
A better option would be to pay off their credit cards one at a
time starting with the card that currently has the biggest
balance while paying the minimum amount neccessary to all other
cards. Any extra money should be devoted to paying off the card
with the highest balance first. Once that first credit card is
paid off then move onto the card with the next highest balance.
Repeat this process until all credit cards are fully paid off
then put all but one in a drawer for safe keeping. Only keep the
one card handy for emergency purposes. Now concentrate all money
that was previous earmarked as credit card payments towards
paying off other bills - perhaps a car or house payment. This
option will only work so long as the original credit cards are
not charged back up again.
If a consumer has financial strength then a debt consolidation
loan can be beneficial for a number of reasons. First it
eliminates trying to juggle numerous bills in various amounts
all at once and instead allows a consumer to focus on paying one
large bill. This saves time, energy and helps to prevent
accidently forgetting to pay one of the many prvious bills which
could lead to more financial charges and stress. The second
reason is that a debt consolidation loan should lower the actual
amount of money paid out each month. NOTE - it may lower the
monthly amount but will most likely increase the oerall amount
needed to finally pay off all of teh combined bills depending on
the terms of the loan contract. Finally it can provide a
psychological boost by relieving an individual of many small
bills in order to concentrate on one larger bill.
So the choice of whether a debt consolidation loan is the best
option or not lies with the consumer. Every situation is
different and must be treated as such. No matter what option a
consumer takes to eliminate debt if there is no financial
resolve or strength then they will again fall into the debt
trap.
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