Monday, February 18, 2008

Debt Consolidation Stinks

I tend to have a lot of stuff lying around my house. I hate dealing with the paper coming into our house (school papers, meetings, mail, etc.) so I end up grouping it into nice piles and set aside to deal with later.

Debt consolidation is much the same, putting the various debts into one big pile because you don’t want to deal with it. But a pile of debt is much more dangerous than my pile of paper.

I can certainly understand why debt consolidation looks good to people who are drowning in debt.

“My monthly payment on the consolidation loan will be less than what I’m paying in monthly payments now.”
Yes, this is probably true. But do you really think paying less money will lower the amount of debt you have?

“If I could get my bills all put together and into one payment, it will be so much easier to manage.”
It will be easier, because you won’t be doing the managing! You are leaving it up to someone else to pay your debts with the little bit of money you give them.

“I’m sick of the bills. I just want to wipe my hands of them.”
Debt consolidation is the easy way out. By not putting forth your own blood, sweat and tears to beat down the debt, you’ll not go through the suffering that is oftentimes required to get rid of the poor spending habits you have.

“The only way I can make the payments is to consolidate.”
I don’t buy this one. If you are in this position in the first place, I can guarantee that you aren’t in control of your money. You have a rough estimate of how much you make each month, but you don’t have a clue how much you are spending. If you can’t make the payments on your bills, sit down at the kitchen table and get it all figured out. Go through each bill that you have decide how you will pay for it. You also need to cut out all extra expenses you have. You got yourself into the mess. It’s up to you to get out of it.