There was a time in the not too distant past that one could spend up their credits cards to the limit, and then find a debt consolidation loan or a balance transfer credit card to lump these debts into one “easy” payment. Nice – that is if you have enough discipline to throw away those old paid-off cards and close those accounts.
Unfortunately, most consumers who took advantage of the system and got a consolidation loan for all those pesky little bills, conveniently didn’t close those paid off accounts, much less cut up their cards. So, you can imagine the mess they find themselves in 6 or 12 months later with more card debt than they can handle because they found excuses to use that handy form of debt.
An even stickier wicket is the so-called adjustable rate mortgage, or ARM, that many folks took advantage of to package all their debts and refinance their home loan all into one easy payment BUT at the end of the initial term, found that they could not pay the new higher payment.
Scrambling quickly to find a fixed rate mortgage that better fit their budget, most have had to let their home go into foreclosure. Hence, we have the worst economic disaster in modern history.
Tens of thousands of these loans have defaulted leaving the lending institutions with unpaid debt and no help in sight but to face being auctioned to the highest bidder or go under. Even when the government does bail-out these so-called “toxic” lenders, it will only serve to prolong the worst over all financial crises faced in modern history.
These bad home loans are intricately tied into debt consolidation and so no one is going to ride out this economic storm unscathed. Folks will just have to tighten their belts to pay off those many credit cards rather than falling back on a balance transfer credit card or consolidation loan.
Any solutions? Learn from our grandparents. These were folks who by and large worked hard, scrimped and saved, and delayed their gratification till they could afford what they were wanting. There was no thought in their mind to just skip down to the local “toy store” with an unsecured credit card and buy the latest and greatest stereo or jazzed up PC, even if they had such things. We will just have to walk away from that tempting new car or boat till we can afford to pay for it from savings.
Truly our debt consolidation troubles have many of us in a stranglehold. It remains to be seen how it will all pan out and there really is no bright side of this picture except that folks will have to learn to live within their means.
We must become more careful and thoughtful of what we want, what we really need and how we decide to pay for it all. In the end, let us hope that we all have learned a lesson from making bad choices. Stop by http://www.debtcredittips.com today for help with your bad debt.
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