Why Debt Consolidation Loans Are Not a Cure For Debt


Debt consolidation loans will help you get out of debt at best and minimize the impact of debt on your life. Debt consolidation works by combining all your smaller debts into one larger loan at a much lower interest rate which means you are able to pay your debt off with much lower repayments. So, if the various debt consolidation options are such a magic wand why is it that so many people are left with the same debt burden two years later on?The answer lies with the fact that debt consolidation treats the symptoms but not what caused the problem itself!Debt consolidation will only work when combined with a willingness to change lifestyle habits, by that I mean spending habits, which, lets face it, is the root cause of any financial problem.Many people fall into the trap of thinking that once they have rectified the problem or got it back to a level that it can be maintained easily again that they can revert back to how they were spending before. The trouble is they do not understand that the acquisition of a loan for the purpose of consolidation is not something they can do every time their finances get into a bad shape.Often it is very difficult to acquire another loan for quite some time, not only that but many loans that are taken out for the purpose of consolidation are given so on the provision that no more debt is accrued on the debts being paid off.There are many reasons that may have caused your debt; unexpected medical bills are one of the largest culprits along with student loans but if you are neither sick nor have student debt the truth of the matter is you are spending more than your income will allow you to.The main reason that you are able to spend more than you earn is the ease that you are able to apply and be approved for credit cards. These seemingly infinite lines of credit allow the ‘buy now, worry about the cost later’; crowd to get into some seriously heavy credit card debt.If the misuse of credit cards is the reason your debt has become unmanageable then the easiest way to avoid this after you have consolidated is quite simply to get rid of your cards completely and revert to using cash.Many would argue that credit cards are useful in a cash emergency, which is a valid argument as long as your idea of an emergency isn’t a dress that is marked down or a new set of wheel rims that are an unmissable bargain! If this is an argument that you feel is valid the you could always get rid of all but your lowest interest card and ask a family member or a trusted friend to keep it for you to avoid any impulse spending.You should think of debt consolidation as your last chance of getting your finances back in line but you need to remember that tackling what caused your debt and not just the symptoms will provide you with a true answer to your plight.