The credit counselling Fable;
credit counselling in Canada has become a trendy method of dealing with debt but could not be the appropriate solution for Canadian's to control their debt. In a growing number of cases Canadian's will look for debt consolidation loans to pay off their debt and start with a new slate. Although this takes care of the short term problem it constantly creates greater problems later on in life. There are two reasons why this happens.
First of all, Canadian's are creatures of habit. By a consolidation loan you're only masking the vital issue, your habits. Although a consolidation loan will satisfy your primary debt it wont deal with your spending habits. Commonly individuals applying for consolidation loans to pay off their debt end up with twice the debt they started with.
This being the second reason debt consolidation loans don’t pan out. Once Canadian's pay off their debts it gives them freedom to available funds, causing the process to repeat itself again. Usually people wind up with their account at the limits again, as well as, the consolidation loan that they took out in the first place. The most generic phrases I hear as a debt manager is "I have to attain a consolidation loan to pay off my debt", "I do not want to use credit cards again". In theory this is splendid 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
Credit Counsellor
Phoenix Credit and Debt Counsellors
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