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The credit counselling Fantasy;
By plrprousers | January 17, 2009
The financial counselling Fable;
Debt Consolidation in Canada has become a accepted solution for handling debt but may not be the right route for people to deal with their debt. In most cases people will look for consolidation loans to pay off their credit card debt and start with a new slate. even though this takes care of the momentary problem it often developes much larger circumstances down the road. The reasons why this happens are;.
First of all, people are creatures of habit. By obtaining a consolidation loan you’re only covering up the basic issue, your habits. Although a consolidation loan will clear your primary debt it does not deal with your spending habits. Generally speaking individuals getting consolidation loans to eliminate their debt end up with twice the debt they started with.
This being the second reason debt consolidation loans won’t work. Once individuals pay off their debts it allows them freedom to revolving credit, allowing the trap to start over again. Often times Canadian’s end up with their debts at the limits again, as well as, the debt consolidation loan that they took out to pay off their debt. The most frequent comment I hear as a financial counsellor is “I want to obtain a consolidation loan to re-pay my debt”, “I never want to use revolving credit again”. In theory this is excellent 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
Credit Advisor
Phoenix Credit and Debt Counsellors
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