Debt Consolidation thoughts
Credit, Good or Bad?
So you go in to Future Shop looking for a 21 inch Television and you walk by a 52 inch Plasma TV. The Television is way over what you were going to spend but you see a sign on top saying do not pay for a year based on approved credit. What the heck it’s free to inquire. After filling out a short application you are approved and the television is yours! At the time you are excited you got a new TV and nothing else matters. About six months down the road you might be thinking this television may not have been a good idea.
If this sounds familiar you are not alone, you are like thousands of other people lured into the world of Credit. My Dad always taught if you don’t have the money at the time how do you know if you will have it later. In other words, if you can’t pay for it then don’t get it. Unfortunately I didn’t always listen to Dad and I to ended up in Debt. You almost have to go through it to really understand it because no matter what people tell you there is always temptation.
There are times when you have no choice but to borrow, most people can not pay cash for a house or a vehicle so they need money. The best advice I can give in these no choice situations is to understand the terms of the loan and always look for the lowest interest when borrowing. Also be aware that most “do not pay” deals or “0% interest” are fine BUT if you don’t have the money when it’s due the total interest for that term is charged to you. Lets say your television was $1500.00 do not pay for a year with 0% interest and you couldn’t pay at the end. The math is simple 1500/12 months is $125.00 a month and average card interest is 19%. Now take 19% on top of $125.00 and that’s $23.75 and then multiply by 12 which gives you $285.00. Your Television now costs $1785 and you may also pay a penalty for breaching the agreement. On $1785.00 at 19% you will pay interest on that. It’s amazing how long this may take you to pay off.
Now imagine if that was $5000.00 or $10,000 dollars you would be in a real mess. Take myself for example, I owed a little over $10,000 on a credit card at one point. When I went to talk to a financial assistant she told me if I kept going making the minimum payments which was all I could afford then it would take 31 years to pay that amount. After hearing that I almost fell of my chair! What a mess I had gotten in to. Now what I was faced with is how to get out of this financial crunch.
There is a Solution
The Bank was really a great help to me when inquiring about Debt strategy. What we did is took everything I owed and grouped (consolidated) it and worked things out again. The loan I got basically cleared me of everything I owed, cards, vehicles etc. and now I was only paying 1 payment a month and instead of 19-18% interest I was at 6% and believe me that was a big difference. With the excessive interest alone I was saving almost $9,000 a year based on my situation.
It has been 2 years now and I am very happy to report that we are on the right track, sure we still own money but the amount is going down. Consolidation is the key and there are a lot of great places and people that can help you. Debt is an evil I’ve seen it destroy people and families but it can be managed. If you are reading my article please remember there is hope, make a move now because each day you put it off you going deeper in to debt.
