Everyone would like to have financial independence that would free them from their obligations. However, unfortunately for those Americans who do not own finding personal financial security may be out of reach.
Nevertheless, no matter how limited our finances may be we all need to avoid serious problems that can be caused by falling into debt. We all like to have the nice things in life, the big car, the nice house and the latest flat screen TV.
These motivations drive us to borrow small and very large amounts of money. Borrowing money is very much a part of just about everybody's modern way of life. Borrowing money can be very useful and necessary. Without mortgages, very few people in America would own their own home.
Problems come when we borrow indiscriminately to fund these purchasers that may in reality, be beyond our means. People's expectations, especially for material goods like expensive electronics, have grown over the years become requirements, rather than dreams.
We would like that flat screen TV and we now expect to have it, almost as a right. To fund these expectations, we borrow money, sometimes indiscriminately, without the correct amount of thought, as to how it will be repaid. So many people are now finding themselves in a situation where their desires have brought them huge debts that they simply cannot fund each month. These multiple debts such as, credit cards, and monthly car payments, can creep up on you with you realizing it.
Paying high interest loans such as credit cards can be a frightening prospect; you may be able to make additional payments to pay off all your debts over a few years. However, for many people, the prospect of actually paying off their debts is outside of their means.
For most, people the only viable and reasonable way to deal with an out of control. debt situation. Is to take out what is known as a debt consolidation loan. Many people are immediately resistant to this idea, because they feel they will simply be taking out another loan, which will at to their existing debts.
This is not how this type of loan actually works; it is one single loan that you can take out and use the cash to pay off all of your other debts. You will then have one single monthly payment. This payment will be of a much smaller amount than you are already paying when you combine all your existing debts, together.
You may pay as little as half of what you are paying every month at the moment. This new loan will have an interest rate many percentage points lower than for example, credit cards, the loan will be over a long period, just like your first mortgage.
The combination of a low interest rate and many years to make the payments means that your outgoings will drop dramatically. You will drastically reduce the chances of you getting serious financial difficulties that you have with high interest loans.
Therefore, instead of adding the amount of debt by you have, you will only be replacing multiple high interest payments, with one low interest loan. Now you have cleared the way for your existing debts, it will be important to be disciplined and to avoid taking out new debts that which could push you back into the same duration is again. You have acquired a new level of financial freedom that you may not have had for many years, so it is important that you do not give away.
Debt consolidation loans are a great tool to give you your financial freedom back, as long as, once you are free you do not choose to chain yourself of in more ill-conceived debt.