Consolidating credit card debt information
Your monthly payment on the ,000 loan is 7 and 3 on the ,000 loan, for a total payment of ,100 per month.
The debt consolidation company tells you they have been able to lower your payment to 0 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Who wouldn't want to pay 0 less per month in payments?
I feel debt is the symptom of overspending and undersaving. A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. He still doesn’t have a game plan to either pay cash or not buy at all.
Our financial coaches will not recommend debt consolidation for a client. He also hasn’t saved for "unexpected events" which will also become debt.
Debt consolidation is nothing more than a "con" because you think you’ve done something about the debt problem.
But they don’t tell you that it will now take you six years to pay off the loan.
This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments.