Should I Consider Credit Card Debt Consolidation?

Let the great debt-ate begin. Many Americans are still being hit hard by the economic downturn of the past couple of years. Though the economy is beginning to show signs of life and the job market is steadily improving, what has been done cannot be undone. Americans are swimming in puddles of debt so deep they can barely breathe. Everyone is looking for answers, trying to find a way out of their mounting credit card debt with unforgiving interest rates. Most are willing to try almost anything to get themselves relief, but should credit card debt consolidation be considered? Perhaps only as a last ditch option. Paying off debt is never a fun process and paying those sky high interest rates isn’t enjoyable either. Of course, you weren’t complaining when you were buying those Jimmy Choo shoes or new Gucci handbag. The question now becomes: how do I stay afloat financially and manage pay off my credit? Well, before considered debt consolidation here are a few things you may try. Ditch any luxuries you may have. When you hear the Word “luxuries” you may think I’m referring to extravagant purchases but that is not the case. Every person has certain luxuries in their lives that they greatly enjoy but can also do without. Here are a few luxuries you can begin cutting out of your life that can save you money that you can put towards paying off your debt: eating out, cable television, drinking out, magazine subscriptions and the like. This is just a starter list. If you limit your meals to that which you cook you could save hundreds of dollars which could be poured into paying off your debt.

Build a budget and honor it. If you are having debt issues it is likely because you either didn’t have or didn’t mind your budget. Write out everything you are spending money on and eliminate those things which would qualify as “wasteful/unnecessary spending” such as shopping. Set out in your budget how much you need to set aside each month to cover your debt. If you need to start by only making minimum payments on your card then do so.

If you are incapable of performing either of these tasks yourself, only then should you consider credit card debt consolidation. This should be considered a last ditch effort only because of the risk involved. First of all, debt consolidation costs you more money. The companies which do the consolidating are essentially lending you the finances by taking over the payments, which you now make to them. They may lower your monthly payment but they will also assess additional fees. These loans often require that you provide collateral, such as your home, and if you are unable to pay, you run the risk of losing your home. For these reasons, debt consolidation should be something you only consider if you are truly desperate.

Impossible as it may seem you can stay afloat despite your gaudy credit debt. Make yourself plan and stick to it. Do away with things you are buying that you no longer need. Perhaps you can sell things that are no longer useful to you. All of these things are great ways to save a few extra dollars that may help you make those debt payments and not need to turn to debt consolidation.