Thinking about taking out a debt consolidation loan? Some people with debt problems may consider this option. However, as a consumer, you need to be clear about what debt consolidation really means and know that you are essentially moving debt around. It’s not actually helping you reduce the total amount that you owe. This can be tricky because it makes you feel like you are making progress towards resolving debt, but unless you’re careful, you could be digging a deeper hole for yourself.
Debt consolidation may seem like an appealing choice at first, because you may be able to get a lower interest rate on some of your debt. However, just because you make a lower monthly payment does not mean that you’re paying less. In fact, it could mean that your term just got extended. One thing’s for sure – the longer you stay in debt, the more you will pay to your lender.
As many people know, debt is often the result of overspending and undersaving. And no matter which way you slice it, this needs to change or else you’ll only be addressing a symptom and not the core problem. If you don’t acknowledge the reason why you got into debt in the first place and change your spending habits, the cycle will likely repeat itself.
So, before jumping into debt consolidation, make sure to evaluate your financial behaviors first. Then, do the math on your current unsecured debt. Figure out how long it will take you to pay it off, and compare that number to the length of the consolidation loan you are looking to take out. Even at a lower interest rate, the debt consolidation loan may end up costing you more money in the long run.
Getting out of debt takes hard work, and debt consolidation is definitely not an easy way out. It doesn’t change the habits that got you into debt in the first place. If you are looking for debt relief, there are various options available to you. However, no matter which option you choose, make sure you budget carefully and commit to doing whatever it takes to get financially healthy.
Trust us – getting out of debt may be one of the best decisions you’ll ever make for yourself. If you need help getting started, give us a call at 1(800) 544-7211 and get a customized solution that’s tailored to your needs.