So, how did you answer? Are You In Debt Management Denial? You can't normally borrow your way out of debt! Many within our western society try to borrow their way out of debt. It is possible that this is a form of debt management denial. Borrow money for any reason often times boils down to something that the IRS has labeled, "Gotta have it now syndrome". For years I have advocated, "If you can't afford to pay for it in cash, you can't afford it." Although operating on cash may be an over simplification when it comes to a house or a car, there is still great merit in the philosophy. These days, using the internet without a credit card, booking travel and many more things are possible only with a card, but much of the costs of daily living can easily be 'cash only' if you want them to. Seeing the money leave you hand will soon make you think twice! I also advocate that consolidating and or borrowing to pay off debt may not be wise. If it is done to get out of debt, it is good. But if in doing so you get deeper into debt, it could be debt management denial. What is attractive for some with a consolidation loan is that sometimes they can get money out in addition to paying off the remainder of their credit card debt. They can also stretch out the term and lower the monthly payment, but... Being honest, a lower payment means MORE TIME IN DEBT. People also convert unsecured debt into secured debt which often is not a wise move. They tie up their most valuable asset and all of this is so that they can spend more money. People need to understand that IF YOU CAN'T PAY CASH FOR IT, DON'T BUY IT. Something else that happens when people pay off a credit card with the equity in their home is the bank reissues the card to them. More often than not, people get back to the practice of using the cards. For the past few years interest rates have been so low and credit so loose that it we are the point where just about anyone can get approved for a home equity loan. Rates could be as low as 6%. Some folks need to understand that YOU CAN'T BORROW YOUR WAY OUT OF DEBT ! Credit Counseling can often offer a way to pay down the debt WITHOUT extra borrowing. |
