Quick, you’re in a dark alley in an unfamiliar part of town. Which would you rather meet up with, five yapping Chihuahuas or one big, mean pit bull?
Me? I know I can deal with the yappers. They definitely can aggravate with their incessant barking and they might even nip; but they can’t eat me.
Welcome to debt consolidation. This is where you take all your little aggravating debts and create one big monster. You might even put the big vicious thing on steroids by consolidating all your debts into your home equity line.
DON’T DO IT.
This is what people do when they can’t stand to listen to the yappers one more second. If you’re here, unplug the phone and find a way to get a quiet moment to think.
You cannot borrow your way out of debt. No way, no how, it will not happen. If a consolidation lowers your monthly payment, it does it by stretching out the term. You will be in debt LONGER and it will cost you MORE- even if the interest rate is lower.
I have read many articles by so-called money experts that advise taking out a home equity loan to pay off credit card debt. YIKES! This advice is so bad I have to believe they are getting kickbacks from the credit card companies. Thankfully, these loans have become much harder to get. Can you think of anything more stupid than to risk your home for the shoes, TV, or dinners that you bought with your Visa?
If you are so sick and tired of carrying your debt; that the late-night TV promises of the debt consolidators are starting to sound tempting, what should you do?
1. Know you are not alone. I can’t say it was smart to get into this position but at least you are in good company.
2. STOP borrowing. Cut up the cards; freeze them in a block of ice; do NOT carry them in your wallet under any circumstances.
3. Make a rational and reasonable plan to live on less than you make and start paying off the debt.
You knew all along that it would take discipline, commitment and hard work to get out of debt. It was only when you were tired and alone and ashamed that you wanted to believe the to0-good-to-be-true promises of the debt consolidators.