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Debt Consolidation : Look for the other Options

There is no question that debt consolidation companies are big business in today's world.  Most people do not think about the cost of such debt consolidation loans before they acquire them hoping that this will solve their financial problems.  You can blame your high debt load on the credit card, but in truth, you are the one who place the charges on the card in the first place. 

Debt consolidation companies do not work for free, generally, and before you sign the contract for their services you should have a clear picture of what this company is costing you.  First, you should be aware that  the monthly payment which you make to the debt consolidator, debt negotiator or debt settler includes expenses well beyond what you would have paid the credit card companies if you have negotiated the deal on your own. 

Debt consolidation companies typically charge from 10-15% as their fee each month.  In addition, most creditors offer the debt consolidation a rebate on the loan which you never realize.  The third way in which you are hit is by the interest rate on the debt consolidation loan which can be over 20%.

By putting in some effort on your own, you can save yourself a lot of money and still reap the benefits of lower monthly payments and faster repayment of the outstanding debt.  In this way, you are the one who pays off the debt more quickly because the money is going against the debt, not to the debt consolidation or management company.

SOLVE PROBLEMS ON YOUR OWN

Begin with an honest list of all your expenses.  Mark those that are absolute necessities.  Cut out every extra.  You can even make a game of it.  I'll give up my trips to the gym if you give up your trips to the manicurist.  Look particularly for those small items which you purchase without even thinking about where the money is going. 

Most people can trim $100 to $150 per month from their expenditures each month without drastically hurting their lifestyle.  Besides, if you think of the cutbacks as temporary, you'll soon be past this bump in your financial road.

One method which is effective for many people is to surrender the credit card to a friend or family member and resolve to get permission before using it except for planned expenditures.   Some strong willed people determine to eliminate all but one low interest rate credit card and to keep the balance under control.

Other people use the option of increasing income in a simple way. 

Perhaps a yard sale or placing something on one of the online auctions periodically will be enough to get you out of the debt hole.  What ever you do to reduce expenses or increase income, make sure you make not only temporary changes, but the permanent changes needed so you won't end up back in debt again.

The National Foundation for Credit Counseling offers free debt management services personally, on line or by telephone.  You can choose a life of continued frustration, desperation and financial hardship, or you can use your options to solve the problem.

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