Let's face it - earning your daily keep is hard yet spending it is so painfully easy. This is an unspoken yet universal fact. How many times have you spent hours on end, wondering where exactly your salary went to? How many sleepless nights have you experienced, thinking of crafty ways to postpone your mounting credit card bills? It even came to a point where you kept looking over your shoulder, thinking the creditors were literally after you.
Unsurprisingly, mounting debts is not an isolated problem, what with credit card companies shifting their sights from getting people who actually have the ability to pay to individuals who have the tendency to go on off-tangent shopping sprees. Sadly, the people who fall on the latter category are those who do not have the means to pay for their purchases and will therefore be charged with whopping interest rates with each day that they fail to cough up the payment.
The sooner you have those debts consolidated, the better. A word of caution though - the process of consolidating those debts must be done properly and by skilled professionals. Otherwise, you may find yourself with an even bigger problem than when you started and we all know that that's not exactly helpful.
First up, what IS debt consolidation? This entails taking out yet another loan in order to pay off your existing debts. However, its advantage is that you get a lower interest rate and secures a fixed interest rate, as you are now paying for one loan alone.
Debt consolidation, more often than not, relies on an asset as collateral - a house, for example, as this gives the lender something to acquire, in case payment terms fall though. A car, while considered an asset, isn't given much value, because its value decreases significantly as soon as it rolls out the dealer's parking lot.
While it's good that you are making efforts to repay your debts, you also need to understand how you chalked up those debts before deciding on debt consolidation. Determine your short and long-term goals and your ability to stick to those terms. Is it those numerous credit cards that are making your life miserable? Then get rid of the ones that you don't use and stick to those that do not charge exorbitant interest rates.
Visit your credit counselor as soon as possible! He may not soothe your ruffled feathers the way you want him or her to but at least you get a clear picture of your current situation as well as ways to get yourself out of the financial quagmire you have gotten yourself into. However, choose your counselors carefully. Make sure that they have a sterling track record and have no unsavory complaints with your state's attorney general's office or consumer agencies. Don't be afraid to ask questions because it is ultimately your credit record that will bear the brunt of any wrong move.
Facing debts may be daunting but with the proper counseling and consolidation, you may just wake up one day debt-free. Not unless, of course, you start charging up those cards again.
