Credit Crunch: Debt Consolidation Tips
Tip #1: Avoid Debt Consolidation Scams.
Being in debt can feel like slavery. If it doesn't feel like slavery to you, then congratulations because you must be free of debt and thus have better things to do than reading this. Debt feels like slavery because it IS slavery. When you take away all of the big terms and look at the reality of debt, you are not working your own gain. You are working solely for your lenders' profits. That sounds like slavery. Debt is bondage, and unless that's your "thing", you need to break the chains that bind you.
While debt is slavery, freedom is a universal human desire and human right. Scammers know this, and they will play on that universal desire to prey on the helpless by offering solutions that sound (and are) too good to be true. Before committing to any plan or solution, learn about what that solution offers and what is required of you. If a solution requires research, planning, and hard work, then it sounds like most real solutions to real problems. If a solution requires buying some "secret", receiving a solution for "X easy payment(s) of Y", offering your credit card information, your bank account information, or any other personal information, then it's probably a scam. We say "probably" because you never know, there really might be unicorns and leprechauns somewhere, but don't count on it with your money. Let someone dumber make that mistake.
Tip #2: Concerning Debt, You Are Your Own Best Friend
All of the above is not to say that some plans don't require personal information. Even checking your credit score requires some of that information. And it's not to say some plans don't cost money. Everyone from debt consolidators to (real) financial experts make money by going to work every day and helping people in debt make smarter financial decisions. But unlike the scammers, real people who really want to help you get out of debt are not "out to get you". Agencies that handle debt consolidation help you lump your debts into one easier debt while convincing your lenders that doing so will make them money. Financial planners and experts who offer their services do so to teach you how to handle your specific debt problems and are, if anything, "out to get" the lenders who seek to prey on you.
It can be difficult to sort the "good guys" who want to help and the "bad guys" who want to help you dig yourself into a deeper debt hole. The only person we can be absolutely sure is a "good guy" in this situation is you.
Here are two things to watch out for if you do look for outside help:
- a) Firstly, beware anyone offering a "get out of debt fast" scheme. If such a thing existed, the "secret" would be out by now. Wikileaks would get a Nobel Prize for it, so there is no way that shady lenders are smarter about "secrets" than governments and international banks.
- b) Secondly, beware any solution that looks like a "one size fits all" deal. No one solution is guaranteed to be the best one for every person's debt plan. Many may use similar tools, many may use similar resources and services, but the most successful are those that are custom tailored to individual needs. Even the exact order in which you use those successful resources can have a profound effect on how quickly and easily you become debt free.
Once again, no one else is more familiar than you are with your particular financial situation. And it only makes sense that, since that's true, no one else cares as much as you do about really helping you to get out of debt. Here is some good advice on how to think about debt.