Debt reduction solutions, has found that as good as it sounds, debt elimination loans rarely save you any money.
In fact, they usually backfire and you wind up with an even greater debt load than before.
Why does such a perfect sounding debt reduction mechanism often trap you into further indebtedness?
Because it is a strategy based upon the premise that you can borrow your way out of your debts!
We have found that to work, a consolidation loan requires enormous focus and self-control. It is all too common for debtors to begin using their credit as soon as the account is paid or significantly reduced.
This incurs more bills. Since this new debt is clearly beyond the scope of the debt payment loan, you again have two loans to repay.
This is how small debts come back and again mount into an ever – increasing spiral of unmanageable financial chaos.
The budget necessary to bring your accounts into line makes no allowances for this kind of behavior or attitude. Too many people lack the self-control and strict budgeting discipline necessary for this type of loan to work.
A bill consolidation loan only makes sense if you can reduce your interest rate. Without a significant interest rate reduction you are only increasing your debts over an extended period of time. The reduction must be low enough to offset the increased time you will be paying it.
Make a list of your outstanding accounts and the current interest rate you are paying for each. Do not consolidate any account that has an interest rate below that of the consolidation loan.