Have you thought about applying for debt consolidation loans to help you to get out of debt? People always think that debt consolidation loans are the ticket to regaining control over their finances, but too often they really don't change anything.
Jeremy from Generation X Finance wrote a great article today - If You're Going to Consolidate Debt Then You Have To Stop Using Credit. In this article Jeremy highlights the pitfalls of using secured loans and unsecured debt consolidation loans to consolidate credit card debt.
Here are some of the pitfalls that Jeremy raises.
Stop Using Your Credit Cards
The biggest mistake that people make is continuing to use credit cards after consolidating their debt. Jeremy highlights how this can really destroy your get out of debt plan.
Don't Risk Your Home Just to Consolidate Debt
The second warning is about using your home's equity as collateral for your debt consolidation loan. I hate when I see people make this mistake. People get way over their head in credit card debt and then try to get out of the mess by getting a home equity loan as a way to consolidate the credit card debt.
Now they are in a huge mess. The credit card debt is unsecured debt meaning that the credit card companies cannot take your house due to defaulting on your loan. But, if you consolidate your credit card debt using a home equity loan, now you risk losing your home if you default on the debt.
I highly encourage you to read the article linked above. Generation X has done a great job highlighting some common mistakes people make with debt consolidation loans.
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