Debt Consolidation

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I See it Everyday

A couple runs up thousands of dollars in credit card debt and can no longer make the payments. In an effort to solve the problem, they take that debt and roll it into their mortgage. They tell themselves that they are saving money . . . and sometimes they actually believe it. They take loans that they owed another 8 or 10 years on, rolling them into a new 30-year loan. They take the house that they owed 22, 23, or 24 years on, and now they owe on it for 30 years.Now they are paying an extra 6 or more years on their house!

Nothing Changed…Except Losing the House

The problem with this situation is that they never corrected the behavior that got them into the problem to begin with, so in a year or two they will run up thousands of dollars on credit cards again. This time they can’t roll it into their mortgage, and eventually they lose their home because they run up the debt to the point that they can no longer make their house payment.

Take Control

If this situation sounds like you, please take my advice. Stop the madness. Get out there and learn about personal finances. Read a book, take a class, or find someone with the experience who can help you.

You have a choice, and the choice is yours.

Bryan Cooper – Financial Life Coach

My Financial Life Coach, LLC

Visit us at:

http://www.MyFinancialLifeCoach.net

https://www.facebook.com/MyFinancialLifeCoach

Keywords: Budget, Budgeting, Change, Credit, Debt, Debt Elimination, Economics, Economy, Finances, Financial, Life, Money, Miscellaneous, Priorities, Saving, Saving Money, Spending, Stress, Uncategorized

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4 Comments

Filed under Budget, Change, coach dave, Credit, Dave Ramsey, Debt Elimination, Economy, Finance, Financial, Miscellaneous, Money, Personal Finance, Priorities, Relationships & Money, Saving Money, Stress, Uncategorized

4 responses to “Debt Consolidation

  1. I’d disagree with this, at least in part. The interest rate most definitely is part of the problem, Jon. Debt consolidation can work because you pay more of your actual debt and less of your interest. That’s just basic maths.

    Addressing how you got into debt and the mindset to stay debt free is the issue. I totally agree that many people will consolidate a debt and then go right ahead and use their cleared credit card again. I think debt consolidation should come after a person has learnt and applied simple budgeting and saving techniques and has also been able to make payments comfortably for 6 months.

    It’s an option that can be very successful, especially if people are stuck on high interest credit cards, but there has to be a strong mindset behind it to avoid slips. I would never recommend anyone to consolidate against their home unless they can prove that their habits have changed.

    • Ian: Thank you for your thoughts on this. The UK must look at debt consolidation differently (better) than the US. Folks in the US look at it as a quick way to get the phone to stop ringing from creditors. Then they never change their behaviors and two years later they are in a hopeless situation.

      I like your idea of living the plan 6 months before going into a consolidation may encourage a behavior change, which is exactly what we are looking for.

  2. Pingback: Get your financial priorities in order « Fabulous&MoneySavvy

  3. Bryan, I totally agree with this. Debt Consolidation does not work because it never corrects the habits that got you into debt in the first place. True, you might be getting a lower interest rate, but your interest rate is not the problem, your debt is!

    Borrowing money to get out of debt does not work. If you fill a hole by digging another hole and putting the dirt in the old hole, all you have is just a new hole.

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