Debt Consolidation – Does It Really Save Money?
This morning I saw the headline – "Debt Consoildation – Save Money Every Month." In the article they made this statement "By consolidating their debts, some people are also able to save money." Now that statement is a much truer statement. SOME PEOPLE can save money.
This "saving money" phrase is a topic I often debate with those facing financial problems.
When someone "saves money" I interpret the phrase to mean they have taken the money and put it away in a savings account or invested the difference.
For example, let’s assume all your consumer debt totals $1900 per month. Through a debt consolidation loan all the bills are consolidated into a lower payment with a lower overall interest rate to $1300 per month. This would reduce your monthly money outflow by $600.
However, if the $600 does not go into savings, investing or paying down the consolidation loan and is only spent – No Money is Saved!
You must focus on debt reduction and not consolidating debt to lower the payment.
The save holds true for items on sale. If you plan on something costing $40 and you can purchase it for $32 the $8 "saving" needs to be saved. This again is where budgets play a major part in everyday money management.
Related Articles
- Debt Consolidation Loans For Consumers – Proceed With Caution - Debt consolidation loans offer consumers sometimes with poor credit or bad credit an opportunity to refinance and restructure their debt. Consolidation loans come with many options – secured and unsecured (no collateral) with the goal of paying off smaller debts and consolidating them into one monthly payment – Beware!
- Debt Elimination Debt Consolidation Team Players - Successes with most things in life come down to planning and mindset. Debt elimination and debt consolidation also require planning, action and a mindset. But elimination of debt is far different than consolidating debt. Let me say from the start my ultimate goal is debt elimination. What exactly do I mean by debt elimination? My goal
- Debt Consolidating – Your Options The Pros And Cons - Taking control of your current debt problems can be an overwhelming task. If the choice is to consolidating debt it comes down a couple of options.
Comments
Feel free to leave a comment...
and oh, if you want a pic to show with your comment, go get a gravatar!