Debt Repayment Fairy Tales: The Magic of Consolidation
I hate the word consolidation. I hate it because people usually do it for one reason, lower monthly payments. This might seem like it’s what they need, but if that’s the case, why do so many consolidate over and over again? And why is repeated consolidation seldom taken into consideration when giving the loan or extending the mortgage? Let me be clear, I think people should be able to reorganize their debt; I just think that is rarely done along with a plan of how to get on and stay on track.
So when you are in financial pain, straining under the pressures of too many payments at high interest rates, and someone offers to show you the magic of consolidation, ask them what their plan is to really help you. If your consolidation becomes a Band-Aid solution, sometimes you’re better off not to consolidate—at least not until you’ve got a plan that you can live with.