There is only one (ethical) way to get out of debt. You have to spend less than you make. This is not the mindset of many Americans. Just because a credit card company or store will allow you to buy something on credit does not mean you can afford it.
Debt consolidation is attempting to reduce the amount of money you pay on interest each month. This can be a great thing to help work your way out of heavy debt, but it is really useless unless you are able to reduce your spending.
If you can cut your spending by just $50 per month that will give you $600 per year to pay off on debt. Assuming you have a credit card with 20% APR that $50 per month will save you $120 in interest. If you put an extra $50 toward your debt every month for 5 years, by the end of that time you’ll be saving $600 each month in money that would normally be going to interest. $600 per month is a lot of money–especially when it is going toward interest where you aren’t actually getting a product for that money.
Some people have a very difficult time finding $50 they could save each month. In many cases these people assume that they “need” a great many things that are more of conveniences or status symbols. If you could pay of your loans and go through extreme debt reduction just by canceling the cable television and your cell phone, is it worth it? For most individuals these two expenses alone total more than $100 per month. $100 per month can go a long way to paying off the principle of your loans and reducing your debt.
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