Torpedo Betty Blog
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Debt Consolidation Good and Bad
January 1st, 2009 by admin
Debt Consolidation can be good and bad depending on how you do the consolidation. If you are a homeowner and you are thinking of adding your debt to your home using an equity line or other line of credit against your home this may be a mistake. If you are currently in a financial situation that you are absolutely certain will improve, and you are certain you will be able to repay the loan, then a loan taken against your home would be ok. However, keep in mind, if there is any doubt you would have trouble repaying at any point during the term of the loan, you could lose your home. It is always better to take a little higher interest rate and do a consolidation that is unsecured or not secured by your primary home. This way, if you fall on bad fortune or illness you do not lose your home. Another aspect to keep in mind is the length of the repayment terms. If you are reducing your monthly payments by less than 5% of your income and extending the repayment terms, consolidation is not a good idea. Under these circumstances is would be better for you to keep your current debts, skimp on the extras to pay your bills and pay them off.
