The credit counselling Fantasy;
Tuesday, September 23rd, 2008 Subscribe To Our Feed
The debt management Myth;
financial counselling in Canada has become a reasonable solution for handling debt but may not be the right solution for clients to control their debt. In a growing number of cases people will apply for debt consolidation loans to pay off their unsecured debt and begin with a new slate. even though this takes care of the current problem it repeatedly creates greater problems later on in life. The reasons why this happens are;.
First of all, people are creatures of habit. By obtaining a debt consolidation loan you’re only avoiding the essential issue, your habits. Although a consolidation loan will pay back your primary debt it doesn’t deal with your spending habits. Usually People getting consolidation loans to pay off their debt end up in twice the debt they began with.
This being the other reason debt consolidation loans won’t work. Once Canadian’s pay off their revolving credit it allows them access to available funds, allowing the trap to start over again. Often times people wind up with their revolving credit maxed again, as well as, the consolidation loan that they took out to eliminate their debt. The most usual comment I hear as a credit counsellor is “I want to secure a consolidation loan to repay my debt”, “I don’t want to use revolving credit again”. In theory this is splendid but often times doesn’t happen
Unless an individual is prepared to tackle their overall problem (i.e. their spending habits) they will not succeed with a debt consolidation loan. In actual fact this is one of the main reasons that the banks have stopped issuing debt consolidation loans. They have, for the most part, stopped this because they recognise that this is only feeding the problem and not solving the problem. If you truly want to deal with your debt, cut up your credit cards, stop access to any revolving credit, make your monthly payments to pay the debt down and track your spending. It is only through the tracking of your spending habits that you will truly understand the fundamental issues of your debt. In order to deal with your debt problems, you must first understand how you got there in the first place.
If you want to live debt free you must recognise your unnecessary spending habits and make changes to eliminate them from your life. If you were to ask me what lesson I teach my clients the most, it’s how to track their spending and identify unnecessary spending.
Greg Martin
Debt Manager
Phoenix Credit and Debt Counsellors
Technorati Tags: No Tags
Related Tags: No Tags
Possible Related Posts
