Debt consolidation 1st quarter 2010

Debt consolidation and the first financial quarter of 2010

Although the financial crisis has passed, as claimed by some sources, the amount of money owed to financial institutions in personal loans and credit cards is staggering. In the last six months there has been a steady increase in debt consolidation enquiries. Never before have so many people owed so much money to banks. To many, the financial stress is so great that they are often forced to take a second job in order to be able to keep up with bills and day to day living expenses. The solution to this problem for many people is to reduce their unnecessary spending. This action alone can reduce debt considerably. Proper financial planning and budgeting will keep debts under control. If an individual is already in financial trouble, it is very important to adjust spending habits.

Credit cards are the number one problem for excessive debt, followed by personal loans and utility bills. The amount of money owed by an individual on credit cards can range from $2,000 to $100,000. Most people fall in the range between $5,000 and $30,000 and the interest rates vary between 9.9% and 28%. A large majority of people are paying only the minimal monthly amount required which then increases the overall total repayments. Personal loans are better than credit cards as the interest rate is generally lower and you cannot purchase more goods without refinancing your personal loan. Another relatively new type of debt are mobile phone bills. It is not uncommon for people to owe several thousands of dollars on phone bills. Debt consolidation can help by reorganising existing loans, however financial discipline is needed as well to control debt problems.

Consumers all over the world are constantly exposed to clever advertising, subtly persuading them to purchase various goods and services. The average person is unable to resist the lure of new electronic gadgets, cars, boats, holidays and other offers. Advertising agencies are using the power of impulse buying to the full potential and consumers are taking loans and credit to their maximum borrowing power and sometimes beyond. Buyers often realise too late that they have stretched their finances too thinly. Recurring bills such as rent, mortgage, school bills, electricity, phone, internet, food and transport are always there for the majority of people. If anything out of the ordinary occurs, such as unexpected medical bills, this could be the catalyst to a persons financial breakdown. More often than not, this is the point when consumers look for debt consolidation as a solution to their financial problems.

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