The credit counselling Fable;

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The credit counselling Fable;

Sunday, November 30th, 2008    Subscribe To Our Feed

The debt consolidation Myth;

financial counselling in Canada has become a approved solution for handling debt but might not be the advisable methode for individuals to deal with their debt. In most cases people will seek out consolidation loans to eliminate their un secured debt and start with a clean slate. Although this takes care of the initial problem it regularly developes much larger circumstances later on in life. The reasons why this happens are;.

First of all, individuals are creatures of habit. By applying for a debt consolidation loan you are only masking the vital issue, your habits. Although a debt consolidation loan will pay back your original debt it does not deal with your spending habits. Commonly individuals obtaining debt consolidation loans to pay off their debt end up with twice the debt they started with.

This is the second reason consolidation loans don’t pan out. After people pay back their debts it allows them access to unsecured debt, allowing the cycle to repeat itself again. Often times people wind up with their revolving credit at the limits again, as well as, the debt consolidation loan that they took out to eliminate their debt. The most generic phrases I hear as a financial counsellor is “I have to attain a debt consolidation loan to pay off my accounts”, “I do not want to use revolving credit again”. In theory this is fantastic 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 Consolidator
Phoenix Credit and Debt Counsellors

 debt consolidation Canada