The debt management Story;

Debt Consolidation in Canada has become a general method of dealing with debt but may not be the proper solution for individuals to control their debt. In most cases clients will seek out consolidation loans to pay off their un secured debt and begin with a new slate. even though this takes care of the momentary problem it typically creates greater circumstances down the road. The reasons why this happens are;.

First of all, people are creatures of habit. By obtaining a debt consolidation loan you’re only covering up the essential problem, your habits. Although a debt consolidation loan will pay back your original debt it wont deal with your spending habits. Commonly Canadian’s applying for consolidation loans to pay off their debt end up in twice the debt they started with.

This being the other reason debt consolidation loans do not pan out. After individuals pay off their credit cards or lines of credit it gives them freedom to available funds, causing the trap to repeat itself again. Usually Canadian’s wind up with their debts at the limits again, as well as, the consolidation loan that they took out to pay off their debt. The most common phrases I hear as a financial counsellor is “I have to acquire a debt consolidation loan to repay my debt”, “I do not want to use revolving credit again”. In theory this is fabulous but more often than not this 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
Debt Consolidator
Inspire Credit Counselling Services

Debt Consolidation Canada

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