Category Archives: Money

Why Debt Consolidation Does Not Always Work

Yes, financial analysts and debt counselors everywhere usually recommend debt consolidation loans as a solution for those who can no longer keep up with the loan payments, no matter the type of loans they have.

Unfortunately, in over 50% of the cases, the borrowers end up in the same ungrateful situation of owing more than they can afford to pay. Why does that happen? Why does consolidating debts not provide the desired results?

Before going for debt consolidation, analyze how you acquired all those debts!

Yes, in theory, consolidating your debts will get you lower monthly payments, no matter if they are obtained by extending the repayment period, getting a lower interest or a combination of the two. In practice, if you keep spending irresponsibly, if you do not give up your recently paid out credit cards and you do not find a way to lower your monthly expenses, you will keep spending more than you can afford and end up in the same ungrateful situation of not being able to keep up with your payments.

Debt consolidation should be the final step of a complex rehabilitation plan!

Just like alcohol addicts need to admit to their addiction and want to heal before they can actually do it, you too need to admit that you have a spending problem and want to solve it before you can deal with the consequences this problem brought about. Read more here –

Therefore, instead of thinking of what ingredients you need in order to cook your meals, think of what you can cook with what you already have around the house. Instead of thinking of what new clothes or new gadgets you need, think of how to make the most of what you already have.

Before you hand out your credit card or pull any money out of your wallet, ask yourself three times: do I really need this item? Analyzing and changing your spending habits is the first and most important step of repaying your debts.

If you succeed in this, you may not need a consolidation loan after all, but, if you do, you will at least know for sure that this loan will get you out of the debt circle and help you regain control of your budget and your life.

Debt consolidation fails to bring the relief most borrowers search for, not because it is not a good solution in itself, but because it is wrongly applied, because the borrowers make the same mistakes that brought them in debt in the first place, mistakes that you will hopefully correct.