Debt Consolidation - Agencies And Programs

Written by Liza Hartung
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Debt consolidation is something most Americans could use. In 2002, 1.3 million Americans filed for bankruptcy because of credit card debt. The average American is walking around with a little over $2,000 in debt. Still, though, we go out and buy new televisions so that we can have a flat screen instead of the one we bought a few years ago. We go out to eat more than necessary. Yes, it's fun, but it isn't fun later when you look and you can't pay your bills.

Just lessening the times you go out to eat to stay in and cook, or buy groceries from the store can help you pay off your debt. How many of us have to have our coffee or mocha frappuccino every day? Well, even just a two-dollar cup of coffee every day comes out to $60 a month. I don't know about you, but that's my entire cable and internet bill.

Everyone ends up in debt because they spend or are spending more they earn. That's the basic fact of it all. When you start to realize that you have several credit card bills or other bills you can never pay off, like utilities, you may want to think about debt consolidation. This is a nice way to take all those bills and turn them into one payment. Most of the time, this payment is lower than if you paid all of them separately.

Considering Debt Consolidation

What happens with debt consolidation is that you find an agency, they pay off your debt and then you make monthly payments to them. You will still have to pay interest, and, because of that, it is wise to always pay more than the monthly minimum. Another option of consolidation is that you pay an agency every month and they, in turn, allocate your funds to the places you owe money. You generally have to pay a monthly fee for this.

Getting out of debt takes a lot of focus. For most people, it's very easy to start. You get your debt consolidation and you're feeling good. You have one lump monthly payment and it's lower than all your previous bills combined. So, you mark your calendar for the dates you have to pay. The first payday comes around and you're so proud because you have the money.

The second payday comes around and it's a little bit of a crunch, but you have it. Third payday you need to use the grace period. And it just goes downhill from there. This is where people really need to focus and buckle down. If you live with someone, have him or her help keep you accountable. If you have a family, explain to them that there are going to be some cutbacks for a while, but in the end, this is the best choice.

Sticking with Your Debt Consolidation Plan

Debt consolidation is helpful to many people as long as they stick to it. Some people will consolidate, only to go out and apply for a credit card the next day. This is not something you want to do. You will have to cut a few things out of your life for a while, such as eating out often, going out to clubs and bars and purchasing home improvement items.

You want to use debt consolidation so that you can eventually get out of debt, not make it more manageable. When you get into debt and you have to make payments every month, you are paying for things done in the past. This way, as things come up in the present or you want to plan for the future, you cannot do most of them because of your overspending in the past. When you get out of debt and start saving money, you are free to plan for your life as it is right now.

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