Debt Consolidation Loans
There are huge companies built up around the debt consolidation loan. The idea is to get lower rates on your credit cards and personal loans and put them into a home equity loan. Then you take the added cash flow difference and save it or invest it. It sounds like a good idea, but it is a pipe dream of sorts.
You may have heard the phrase, “No pain, no gain.” It is also true for debt reduction. A debt consolidation loan is a way to avoid the pain of cutting back expenditures and living within ones means. Until you learn to live within your means, no amount of debt consolidation is going to help you. Why would you be naïve enough to believe that you are suddenly going to change? That is the real question. Statistics show that 99% of people that take the debt consolidation loan route will end up poorer and higher in debt within five years.
When you feel the pain, you start learning. The point in getting out of debt is to learn how to do it. You should not look for shortcuts like the debt consolidation loan.
The worst thing I have ever seen is when parents pay off their children's debt for them. In almost all cases, the children get the debt back in a few years. Then, the parents are faced with the same dilemma. Fortunately, most parents back off after they realize the first round did nothing to help.
| |
