Debt consolidation a good or bad thing?
Question:
Answer:
It may be bad on the short time: you cut your capacity to borrow some money. As long as you don't pay your consolidation loan, it will be really hard to get some credit.
But on the long-time, you'll get a real improvement of your credit.
The best thing is to get a consolidation loan from your bank or credit union.
Good luck !
Debt consolidation is mostly bad because of the psychological effect it has on you; you will instantly feel better because you only have "one debt", and you will revert to being the financial idiot you were that accumulated your debt. And the hole you are in will soon be even deeper!
Skip it.
Rank your debts, smallest to largest, ignoring the APR's, and pay minimums on all but the smallest. Sell stuff, work overtime, eat boiled potatoes, deliver pizzas, and send every penny you can to that smallest debt until it is gone. Then move on to the next. etc.,etc.,etc.
Soon you will find yourself thrifty and rich, not a bad place to be!
Good luck
Debt consolidation is good as a *second* step in debt reduction. It *must* be preceded by the first step: rearranging your life completely such that you spend 90% of what you earn (either by cutting your spending or increasing your income or both). Otherwise, you debt will still continue to increase.
Once you have your finances in order (in terms of your income and expenses), then you can think about how to go about eliminating the debt you already have. Then -- and only then! -- can you talk about things like debt consolidation.
Debt consolidation is just getting high interest loans reorganized as a single, lower-interest loan. It's a good idea -- as a second step. :-)
Good luck,
Doug
PS: I think "The Millionaire Inside" is awful show. It's designed to sell books for the panelists -- not to make you wealthy. Don't even get me started about that "Rich Dad Poor Dad" quack . . .
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