Is Debt Consolidation Really Helpful?

October 29, 2011 · Posted in Finance 

The process and act of taking out one loan to pay off many other loans and bills like student loans or credit card bills is called debt consolidation.

When it comes to debt consolidation, the main goal is to basically reduce the total amount of loan repayment through interest rate reduction.

The benefits and advantages of debt consolidation when one is in cycle of debts is what many debt consolidation companies, programs, and services have argued about. But whether or not debt consolidation is really useful in helping people get out of their debt problems is the question that needs answering. Most agree that when it comes to solving their debt problems, debt consolidation is helpful but still, even after they consolidate their debts, many debtors still find it hard to get out of their debt problems.

Why is that so?? Try to put it this way – Most of these debt consolidators are in debt problems because they spend on credit and are used to spending more than they can afford to. As such, they eventually run into debts in the long run since they are always spending more than they earn every month.

These debt consolidators will have their credit card balance clear after debt consolidation and they will also have a single loan payment with extended repayment period.

With a lighter loan repayment amount, most of these people will begin to relax and usually over spend on their monthly budget again in the near future.

By doing so, they will eventually run into debts again. But it’s not really a surprise to see that most people who have consolidated their debts before are once again running into debt problems.

How does one get out of debts? Debt consolidation is a tool to help debtors get out of debt problems. But as mentioned above, many have used it to increase their debt problems.

Adjusting your spending habit and committing to a more disciplined lifestyle is probably the only surefire way to get out of debt. The truth is, I believe the get out of debt formula is really simple:

Either you spend less money or you try earning more money.

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One Response to “Is Debt Consolidation Really Helpful?”

  1. Debbie Bunker on October 29th, 2011 11:02

    Bankruptcy is very useful for all which is secure and unsecured loans both. this article has valuable information about debt consolidation.

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