March 22, 2007, 5:20 pm

Life After Debt Consolidation

by: The Financial Blogger    Category: Pay off your Debts
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By consolidating your debts, you will definitely feel that you got rid of a huge burden. However, falling into the same traps is really easy. Individuals are confronted to ads, promotions and pre approved credit cards on a daily basis. How to react? What to do to prevent these situations? Here are some tips in order to put your financial situation back on track:

The very first thing to be done when you are doing a consolidation loan is to establish a well balanced budget with your financial advisor. There is no point of consolidating your debts if you know already that you won’t be able to get even at the end of each month. By making a budget, you’ll be able to see your monthly cash flow, pinpoint your unnecessary expenses and to set up goals. It is really important to put time and effort in your budget as it is the base of everything.

The best way to not crumble under a ton of debts again is to get rid off the temptation. By cutting off your credit cards, it will be harder to buy everything you want on the spot as you won’t have the money available to do so. You should keep only one credit card for emergency purposes. A small limit credit card would be preferable. Some credit cards company might send you a new card with more features after you cancelled the previous one. After all, you were a really good customer of theirs. Don’t even bother opening those envelopes; simply throw them in a garbage can. Your life and financial situation will just get better.

Consolidating your debts could be a painful process. You might feel guilty and not responsible. Consider this step more as a lesson and learn something out of it. In order to encourage your effort, you should aim for a specific goal. In order to do so, define a monthly amount that you will put aside. Calculate how much you need to reach your goal and pay yourself first. You probably already hear that expression but nothing can me more true. By paying yourself first, you oblige yourself to live without this money and to spend consequently. Set your goal as your main priority. That will motivate your action to save money instead of wasting it.

At your first meeting with a financial advisor, make sure to build a plan with him. Consolidation is only the first step of financial freedom. Make sure that your goal is integrated to a well balanced budget. Then, you will be in a better position to manage your personal finance. Don’t hesitate to follow up with that person as he is there to help you out. Independent financial advisors are particularly known to offer this kind of service. They will develop a plan related to your specific needs. Make sure to understand every step and term used by them. Sometime, small things are explained by big words for nothing.

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