Bad Debt The Global Problem

By Author: Maria Tillinghous
Total Articles: 33
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Most of us have heard varying accounts of debt consolidation, while some promote consolidation as a simple and effective means of debt relief, others give terrifying accounts of increased debt and ultimate financial disaster. The truth is somewhere between these extremes, depending on the situation, and debt consolidation could potentially be effective at lowering your debt. A debt consolidation program may or may not be a good solution for you, depending on the amount and type of debt, and your current earnings. "How successful your debt consolidation program is" depends on your debt perception, your general thoughts about money. You need to keep the dos and don'ts in mind when considering consolidation.

If you are considering a debt consolidation loan, first consult a professional debt advisor. Look to an advisor who can help you to explore as many options as possible without trying to sell you his/her product. Sometimes the best solution isn't a product, it may just be that you need to change your attitude about debt generally, or you might need a way to budget better or you may need some combination of professional ...
... advice and a change in spending habits. You need to think about the repayment terms before choosing a debt consolidation loan. In general, paying the lowest monthly payments with longer repayment period means more to be paid in the long run, since more interest will be accrued as repayment period lengthened. Also lowering your payments but continuing with your old spending habits will just land you further in debt.

Is a loan or a mortgage better for you, in handling your debt consolidation? Annual Percentage Rate is lower when you have a mortgage. ending your debt quicker, but risking your home.

If you can no longer handle the payments, you need to consult a credit advisor to learn what you can do differently. Do you need to get out of the red? A debt advisor can help you choose the right one if necessary and not the same thing works for everyone, each person is different and each person's debt situation is different.

It is imperative that if you have consolidated your debts with a consolidation loan, you stop charging to credit cards, store cards or overdraft accounts. If you have a consolidation loan to pay off older debts, it can be very tempting to make new charges to these accounts, adding to the already serious situation. Since the last thing you need is new debt tacked onto the old ones, keeping one credit card for emergencies can be a good practice -- but only if you're aware of how you got into trouble in the first place! What habits do you have that lead to the amount of debt you currently owe? Be sure to analyze your spending habits and consider ways to change your ways, as consolidating debt to free the way to spend more money will put you in an endless cycle of ever-mounting debt.