Consolidation means paying existing debts with the help of a new loan with lower monthly payment and having longer repayment period. Consolidation loans help people to pay off their existing debts. Debt consolidation loans are helpful to pay-off credit cards, medical expenses, student loans and many others.
It is never, let me say that again, NEVER, a good idea to borrow to pay off other debt. Instead one must change their habits. Yes, I said change your habits! That is stop being a spender and become a saver. Saving is the key. However, first a person must reduce their debt as soon as possible. When one debt is paid off, apply those funds to the next debt and then the next and so forth. Doing so will reduce your debt faster. Once you are debt free, and that means car and home loans as well as credit cards. (John Cummuta calls this the debt accelerator and Dave Ramsey calls it the debt snowball. No matter what you call it, it just makes since.) Put all the money you had been putting toward your debts into savings. Then never use credit again. If you can't pay cash, then you don't need whatever it is you think you want at that time.
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