While a debt consolidation loan can seem really, really tempting, the fact of the matter is that often times such things only drag out your payback on consumer debt. And, if you take out a debt consolidation loan on the equity in your home, you risk losing that if you can’t make payments. The best solution is to take a good, hard look at your personal finances and do a little financial planning to tighten the old belt and pay off your consumer debt ASAP. Why? Because you’ll pay less money in interest charges, make a true lifestyle change and feel a lot better about your financial situation.
Consumer debt is a hinderance to your financial goals
It’s really hard to concentrate on your financial goals when you are stuck worrying about getting out of debt. Consumer debt (things like credit cards and department store financing) tends to build up, and with high interest rates and low minimum payments, balances don’t seem to get any smaller. Plus, the more payments you make, the more worried you become about paying bills…and making all the payments. Once you clear that consumer debt out of the way, you can really begin working solidly on your financial goals.
You can keep more of your money after you pay off your debt
The faster you pay off debt, the less you pay in interest charges. This means that you get to keep more of money. Think of it this way: simply paying the minimum on your credit card balance can mean paying back as much as three times (or even more) what you actually borrowed. Now contrast that with doing a little belt tightening and using aggressive debt reduction to get your debts paid off faster. You’ll do without for a little while, but you’ll feel much better (and save a ton of money) when you make debt reduction a priority.
Living without consumer debt is a lifestyle. And the first step is determining to get out of debt as fast as possible and then make a committment to stay out of debt.