Common mistakes made while consolidating debt
For most consumers, the need to engage in debt consolidation is a sign that they have been doing a poor job of managing their money.And immediately after consolidating, many of these individuals no longer feel pressured by their inability to pay their debts, so they go on a spending spree.When they do the math, people are often surprised to discover that their debt-to-income ratios are significantly higher than the recommended amount.Determining your debt-to-income ratio provides an excellent reminder that you aren\'t supposed to live paycheck to paycheck, spending every single dollar that you bring in each month.Their previously maxed-out credit cards now have zero balances and, often, these consumers can't resist the urge to shop.In short order, many people who consolidate their debt go on to rack up so much additional debt on their credit cards that all of their newfound money is once again needed to make credit card payments.But missteps or miscalculations can cost you a lot over the long term or inadvertently hurt your family when you’re gone.When Consumer Reports recently conducted a nationally representative survey about Americans’ money habits, we found several common and insidious blunders that could cause significant financial, and sometimes emotional, pain. If you’ve stepped in one of these potholes, you’re not alone.
Everyone makes money mistakes, and some might be unavoidable when people are in financial distress.
Once you can afford to make the monthly payment on your loan, you can make extra payments and begin to retire your loan as quickly as possible.