Should I Consider Credit and Debt Consolidation?

With the economy on the fritz and over ten percent of Americans out of work, people are looking for ways to stretch their dollar a little farther.  I personally believe one of the easiest ways to do that is with credit card and debt consolidation, and keeping yourself in financial bliss will mean using this tool wisely and ant the correct time.  Keep your eyes open and be creative, there is more than one way to skin this credit card cat.

Good Reasons to Consider Credit and Debt Consolidation

If you have a medical emergency, or lose your job, debt consolidation services can really help you keep afloat, especially if you act fast enough to avoid damaging your financial history.  So many people simply deny that they have a problem and by burying their head in the sand can’t react quickly enough to avoid major damage to their financial lives.

The secret to surviving personal finance is cash flow.  How much you make per year only matters when compared to how much you spend.  When the disaster hits your added debt payments can throw your cash flow negative.  Credit and debt consolidation services will pay off all of your current debts and loan you the money over a longer period of time.  This will reduce your over all monthly payment, and in some cases reduce the total amount of money you will pay in total.

When looking for a consolidation service you need to watch the fee structure.  Often these services will roll into your loan a very high loan origination fee.  This is nothing more than an added interest rate in disguise.  You need to do the math to determine if the whole package is saving you money or cash flow.

The other common “buy up” with the debt repackaging industry is (for a fee) they will attempt to negotiate your creditors to a lower price.  While this sounds good on paper it is a horrible idea unless their fee is in direct relation to the amount they lower your credit value.  The unscrupulous ones will often ask you to quit making your payments because this will put you in default.  Once you’re in default the creditors believe you won’t pay them and will be more willing to take less as settlement.  This is fine if you’re truly out of money, but if you’re not is horribly immoral.  However, you don’t need to pay a company to do this for you.  You can do this on your own.  Don’t pay for debt settlement services.

In summary credit and debt consolidation services are a valuable tool in your battle on debt and personal finance survival.  However, if you don’t address your core issues with money management you are very likely to run up your traditional credit cards and other lines of credit again.   I recommend money counseling as your real problem solving with consolidation used as one of your tools.  Or else in two years you’ll be seeking consolidation again.

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