When you hear “debt consolidation,” a lot of alarm bells will probably ring in your ears. Why is this the case?
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Here are some reasons why debt consolidation is a myth.
The Debt is Still There
When you consolidate your debts, it only means that you are moving your debts somewhere else. If you previously accumulated debt in your Visa credit card, when you consolidate your debt, you are just moving them to a different type of debt. The solution to seeing of your debt is to actually pay for them. In full or in installments, it does not matter. Just pay for them and get rid of them for good.
The Cause of Debt is Still There
Even if you consolidate your debt, if you have not changed your spending and paying habits, the debt will just keep coming back. The solution to being debt-free is being able to curb your spending appetite. Spend only when you need to and not because you have nothing else to occupy your time but shop.
Debt Consolidation Companies
When you get a call from a debt consolidation company saying that you can consolidate your debt and be debt free, that is not a 100% true. First, you will need to pay the debt consolidation company. They will not work for free. So, the better step to take is to map out a plan for yourself. Cut down on unnecessary spending, such as paying a debt consolidator, eating out or going out every day. Afterwards, you can take out a loan from your bank or credit union to find out if you are eligible for a loan to pay off your credit cards or other loans. Then, you will just have to pay with one bank as opposed to several banks which in itself can cause some anxiety.