Consolidation loans and home equity loans work like this: Take one of these loans out. Pay all of your different credit card debt and other debt down with the loan. Pay one monthly payment with a lower interest than what you were paying before. Good deal, right?
It’s only a good deal if you budget and watch your money from now on. A common practice of people who do loan consolidation is that they don’t change their spending habits. They run up their credit cards like normal. So now they have their new credit card debt AND their consolidation loan debt.
Bottom line: Change your spending and saving lifestyle before you decide to take a home equity loan or a loan consolidation and you won’t end up in a debt spiral.
