Is debt consolidation right for me?
It is true that debt consolidation is not for everyone. While many financial advisors advise their friends and customers that it is never a bad idea to consolidate your debts, you must look at your personal debt situation. Everyone’s debt and financial woes are unique to how much money they make, how much they spend, and the loans and lines of credits they have committed themselves to. There is no magic financial repair wand that applies in every situation. Don’t let yourself get bullied into an avenue of debt elimination without knowing which is right for you.
How do I know what is the right way out?
Ok you know you need an exit strategy to get out of whatever financial problems you have. The question you now must ask yourself is how. Start by requesting a free copy of you credit report. This report will identify everyone to whom to owe money and how much. Take this report and start to add the amounts up and find out where you stand. If you see that you are paying more than you owe every month, something you probably already guessed, find out by how much. If the difference is only a few hundred dollars to the low thousands between what you owe each month and your monthly income, debt consolidation could be just what you need to get out quickly from a mounting financial problem. Debt consolidation will take all those bills and creditors from your credit report and put them together into one lump sum paid to be paid every month. Sound to good to be true? There’s more. A good debt repair specialist will get your principal amount owed, the combined outstanding debt you owe, lowered by up to 50-75% and at a better interest rate than you now have! This means to you, paying down your debts quickly, keeping more money in your wallet every month, while not sacrificing you credit worthiness for the future. Sounds like a win win situation.
When is consolidating your debt a bad idea?
It must be said that consolidating your debt may not be a good idea, and in fact could just prolong an already bad situation with your debt. This occurs when you find yourself for whatever reason, in a financial situation that is simply too sever to be saved or substantially improved by a debt consolidation. If you are out of work and making no payments on your debts, in danger of losing your home due to an impending foreclosure, you need to think about options like bankruptcy or if you are lucky a debt settlement. In these severe financial situations, your debt is going to need to be settled completely in order for you to get back on your feet, and unfortunately your credit history and your any future loans you take, are going to take the heat.