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Debt Consolidation – Consolidate Your Debt
Debt consolidation is a good idea for some. However, it does take preparation. If you want to consolidate your debt you can’t afford to go in unprepared. First off, this is not about getting another “loan”. You’ll want to make sure you are not using your debt consolidation loan to rack up more credit card or consumer debt. That isn’t what a debt consolidation program is all about. It’s about debt reduction. So, how can you get prepared?
At a bare minimum you’ll want to do the three steps in this debt consolidation quick-start:
1) Dump your extra cards. Dump all but one or two of your credit cards with the lowest interest rates. Make sure they aren’t carrying yearly fees either. Now…take those cards and put them away. You won’t need them considering you will start doing number two. You must get rid of your credit card debt.
You may be worried that dumping your cards will lower your credit score. Forget it. You have bigger issues than that. Your credit should be back in line by the time you are done. Keep your eye on the prize: use this debt relief to eliminate your payments without filing for bankruptcy and get debt free.
Debt Consolidation – Consolidate Your Debt
2) Pay Cash. Start paying cash for everything. You have likely heard about envelope systems, right? If so, you know that you pay cash for everything including bills. I hate wasting time. Imagine all the time wasted paying your bills with cash. The lines, etc. I just don’t think it is necessary. If you pay your bills online continue to do so. Your time is money, no? Just pay off the creditors.
If you have an emergency and need to tap into your emergency fund by all means do so. All I am saying is have a good reason to use anything but cash. Groceries, gas for your car, the smoothie from the corner shop, etc. should be paid for in cash.
Debt Consolidation – Consolidate Your Debt
3) Be accountable. Get your family involved. Show your spouse and family what you are doing. Better yet, explain how you are paying off your debt to a friend. Be candid about your goals and ask for help. A friend or family member may think twice about asking you on a shopping spree or going out to eat. Use a support system to help you keep on track. Sometimes, this is much more effective than any credit counseling. Check out this article on Steve Pavlina’s blog for a solid personal accountability system.
This is a solid debt management plan even if you don’t really need debt consolidation loans. So, dump the extra cards, pay cash, and stay accountable. These three steps will get you started on the right track to a solid and successful debt consolidation.
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