Debt Management Services

Do-It-Yourself Debt Consolidation: Is a Good Idea?

Everyone is talking about debt consolidation. It’s on the radio, television commercials, on the internet and in the mail you receive each day. It seems like such an easy thing to do -- just put all of your debt on one low interest rate credit card and begin to pay it off, right? Well, not exactly. Individuals become swamped with debt because they are depending on credit cards to get them through tough times instead of using their savings. Shifting debt around (paying one debt by creating another debt) isn’t the ideal way to handle your personal finances. If a person wants to consolidate their debt on their own, they have to make some serious lifestyle changes.

There are many reputable debt consolidation companies that can help people consolidate their debt and, just as important, guide them on how to better manage their money. These companies do charge a fee for debt consolidation but they also provide appropriate training and they insist that all credit card use stops. That’s right, no more using the credit card for things that are not necessary.

Do-It-Yourself Debt Consolidation: The Options

If a person does decide to consolidate their debt on their own instead of using debt consolidation companies, they have a few options available to them:

• Balance transfers: A person takes their total debt and transfers it to one low interest rate card. This sounds easy enough, but what happens when the low introductory rate doubles or triples after six months and the credit card debt isn’t paid off? Transfer the balance to another card and then another and so on. The problem with that is all this activity starts showing up on your credit report, and that’s bad news.
• Home equity loan: This do-it-yourself debt consolidation method can work for some people; however, it has it drawback because their house is being used as security. If they fall behind in their payments, they could lose their home. They will also have to pay fees, such as appraisal and title insurance just to name a couple. In addition, recently home values have fallen over the last several years so getting a home equity loan is harder.
• Personal loan for debt consolidation: If a person has good credit, which might not be the case if they are deep in debt, a personal loan may work. Of course, banks are not giving out money to just any one. It has become very difficult to get a personal loan and the interest rates are not great. Credit unions may offer lower rates but consumers should read the fine print before committing to the loan.

These are just a few options for do-it-yourself debt consolidation -- depending on the financial situation more debt relief options may be available. It certainly wouldn’t hurt to speak with a certified credit counselor. Before a person makes the phone call though, they should figure out their debt and how much money they bring in each month. They should also do some background investigation on a few credit counseling and debt consolidation companies. These agencies are not all the same, and it’s important to know who you’re working with.

Debt consolidation takes discipline and the desire to wipe out the burden and the stress that debt brings. The spending will have to stop and the credit cards will have to go. Most credit counseling agencies let individuals keep one card for emergency use, but that’s it, emergency use only. There is no easy way out. Debt consolidation is serious business, but with the right focus, training and guidance, many people finally purge themselves of their debt.

You Don’t Have to Do Debt Consolidation by Yourself

Consolidated Credit Counseling Services has helped over 5 million people get out of debt. We can help you. Call 1-800-320-9929 to speak with a credit counselor about your credit card debt and find out the best way to consolidate your debt. Or start an online budget analysis to see if a few changes to your budget are all you need to get out of debt.