BREAKING FREE FROM CONSUMER DEBT

2007-03-08 10:33:40

( Financial )



Consumer debt occurs when consumer credit is outstanding—when debt is used to fuel consumption more than investment. Failing to know the difference between consumption and investment and falling into bad spending habits such as being late with payments, late with other creditors, or if the creditor merged with another entity and changes its interest rates, plus habitual overspending can all contribute to deeper consumer debt.

One needs to go through consumer debt counseling to find out what exactly is the root cause of overspending, being late with payments, or living from hand-to-foot. After identifying the problem, consumer debt management can begin. This is a solution tailor-made for the consumer in debt that depends upon the ability of the consumer to make changes in life. Now, knowing the difference between day-to-day needs and wants, and which wants to do without is key to financial freedom. Once the decision is made to spend only on needs—and sticking to that—is a commitment made to living a life debt-free. That includes being honest with spending, and understanding exactly where does the money go-- most especially when it comes to prioritizing debt payments – such as cutting down eating out to once a week, saving money by eating at home, or paying more than the minimum balance of credit cards.

But sometimes, paying more than the minimum balance on different credit cards isn’t enough because of high interest rates and compounding annual fees. With consumer debt consolidation—collecting all debts into one credit card—is much, much easier to maintain than having to keep up with astronomical fees and interest rates from different credit cards. Some companies even offer rewards for transferring all consumer debt into one card— such as reducing outstanding debt. But be careful—interest rates and fees written in fine print will still apply.


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