Debt Consolidation

December 22, 2011 by staff 

Debt ConsolidationDebt Consolidation, It is no secret that consumer debt is a significant problem in the U.S. Its total stood at a staggering $2,400 billion in 2010, meaning that the average U.S. citizen was encumbered with around $7,800 worth of debt across a plethora of loans, credit cards and financing agreements.

Although 2011 has seen a slight improvement and witnessed the rate of household income spent on debt services fall from 13% to 11%, the good citizens of America are still investing vast sums of money into outsourcing the management of their debt. However, the question is whether this is money well spent or simply a case of throwing good money after bad?

Debt consolidation is often presented as the answer to consumers’ prayers, and something that can ease the burden of multiple debts and leave you with just a single monthly repayment to consider. While there are some merits to its purpose, it is a paid service that does not significantly reduce the level of your existing debt. While a debt consolidation company may negotiate with creditors to freeze or reduce interest payments there is no guarantee that they will be successful, and your monthly repayments to them will also include administration and service charges.

Debt consolidation companies base their services around easing the consumer’s stress when it comes to managing financial liability. However, they do not achieve this by employing any practice that you could not implement yourself if you put your mind to it. Calculating your levels of income and overall expenditure is a practice that would be a good habit to get into anyway, while negotiating with creditors over interest rates and monthly repayments is as simple as picking up a telephone and being honest about your financial predicament.

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