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Many individuals thinking about their credit card debt are searching for a debt consolidation loan with a lower rate of interest. A consolidation loan will restructure all their high interest credit card debt into a single loan with a substantially lower rate of interest. This, they expect, will solve their problem.
However, this is simply not the way it is. Having a significantly lower rate of interest, a credit consolidation loan will decrease the monthly payments and permit significantly more cash for daily expenses. Nevertheless, the problem that triggered the monthly payments to be too high is really spending habits that are out of control. These need to be changed to really eliminate the problem.
While some individuals pay cash, credit is the financial loophole that allows you to receive goods and services and pay for them later. Plus, most people are true consumers. They wish to purchase or consume more and more. When something is advertised on television or on the internet the ads are frequently so enticing that the desire to buy without hesitation is overwhelming.
And, almost universally, the down payment is low and the monthly charges are just so affordable. There is extremely little to find objectionable in such an enticing proposal.
These days almost no one asks if they are able to afford to buy something. The primary question is, ?Can you afford the payments?? It does not matter if you can afford to pay cash for something. The only thing that matters is if the payments would be too high for your budget.
It seems everyone wants to extend credit to you. When you?re making payments on your bills on time creditors are willing to extend you more credit. With no negative items of your credit report, you credit score labels you as a person worthy of trust. Merchants are more than willing to give you more credit so you are able to purchase what they are selling.
However, you should understand that whenever you use credit you are not buying something. You are financing it with a loan that involves interest charges.
Ultimately you will pay some bills late or even ignore a payment or two when your credit card debt becomes too high. Your fantastic world of consumer credit weighs forcefully on you and is just about to crush you. As soon as you quit making on time payments your credit score falls dramatically. You will no longer get new credit to finance your consumer lifestyle. You start to dread going to the mail box to find all of the bills and hope no other creditor calls you on the phone today.
This is where a two pronged methodology is required.
You should first decrease your monthly payments by getting a credit consolidation loan at a substantially lower rate of interest then you have on your credit cards. This may give you more cash to make use of wisely each and every month.
The next thing you should do would be to discover how you can more wisely spend money. This is the key that might have have kept you out of credit trouble in the first place.
You should discover methods to to manage your urges to spend. Get on a cash only basis. Purchase what you are able to really pay for. If you use your credit cards, you should pay off the balance every month so you do not get into more credit card debt. You?ll experience the exact same mess again and again if you allow your credit card debt to swell until you cannot make the payments.
You may need to have a discussion with a credit counseling professional to help you establish a budget and realize how to live inside your budget. You have to confess that your previous ways of managing your money didn?t work well for you.
A credit counselor will help you establish a personalized plan that will keep you out of financial trouble and help you reestablish your credit.
Your way of living and your spending habits will need to change. But you will be better prepared to live within your means and have far fewer financial issues to be concerned about. You will sleep better at night understanding you are free of all that credit card debt.
Source: http://zenfinanceadvice.com/2011/debt-consolidation-loan-offers-help-with-credit-card-debt/
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