Debt Consolidation and student loan consolidation

We all live in a world where it is easy to get credit cards. When you first begin your journey unto adulthood and bring in income, there are requests and applications available most days to convince you that you need to have a credit card. The worst part is that they only require small minimum payments that barely cover the interest fees, much less paying off the debt itself. Once you acquire one credit card, you are assumed to be a safe risk and may be asked to apply for a variety of high interest, low payment credit cards for everything from general use, to store cards and even gas cards.

As easy as the cards come, the debt continues to follow just as easily.  Eventually, this credit card debt becomes increasingly larger and the ability to pay with your card at so many places can begin to add up and become unmanageable. A good credit card debt consolidation plan will encourage you to list all of your creditors and therefore make an inventory of the entire debt that is due. Sometimes this includes every payment that you make and compares it with what you must pay immediately and those that can wait longer.

Credit card debt consolidation is a way of fighting against the pernicious and creeping spread of credit availability. People who begin to get credit are soon offered multiple lines of credit, sometimes with high interest rates since they are more of a risk and are just beginning to establish themselves. Credit card companies are also more likely to realize that, over time, you will continue to increase your income and be able to handle more credit. That is, if you can make it that long. The reality is that, in just a short while, your credit rating can be ruined by overextended credit card debt.  This can not only affect your day to day finances but also your credit score. This can make it very hard to obtain new credit once you have cleared up the debt issues, since it appears that you are unable to manage your financial responsibilities in an adequate manner.

People more commonly use credit cards because you can charge them now and worry about paying later. The reality is that many people in credit card debt spend more than their income will allow. If this bad habit continues, they are not only forced into debt consolidation but could possibly lose access to all of their credit cards and many other financial resources besides. Indeed, part of the credit card debt consolidation management plan should always include debt management and changing spending behavior to ensure that they are not in the same situation.

One thing to remember is that just because someone puts into practice good credit card debt consolidation management plans the first time, the real change comes when their spending habits are also changed. Otherwise, they will be back to the same situation in just a short while.  Often when you are in debt consolidation and you acquire new debt, this new debt will not be included in the old consolidation plan.  People may end up making more than one payment to several places and thus increase their credit card balances again.

The real answer is prudence. Every one of us must draw up a list of incomings and outgoings and keep to that plan solidly. There is no escaping from this hard fact of life. As Mr Micawber immortally said, in Dickens’ novel David Copperfield, “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”

That’s a lesson that is as true now as it was then. What a shame there was no such thing as credit card debt consolidation in Mr Micawber’s day!

But the final thing to mention here – and it’s big news – is that under new laws you can quite legally write off credit card debt if the original credit agreement was made prior to April 2007.