What is the Best Debt Consolidation Solution? (cont.)
Contributed by Melanie Vannuys
A good rule of thumb to follow when it comes to buying an item with your credit card is this: If you can't afford to pay for it in cash now, you probably won't have the cash in a month when the credit card bill is due. Once you cross that line, it's difficult to get back to the other side.
There is a fine line between "wants" and "needs" - be careful not to get them confused. We all have those "wants" - big screen TVs, that new SUV and so on. But before you make that large purchase, ask yourself, is my current car in need of replacing? If it's not, why take on a larger car payment? And do you really need that new 51" flat screen TV? Probably not.
Using Your Savings Account As Your Debt Consolidation Solution.
If you have a personal savings account and there's a fairly large balance, you may want to consider using it to pay off some of your debts. Start with your higher interest debts and then move on to your debts with the higher balances. Pay off what you can in full and then work on the smaller balances and lower interest debt. This way, you're not incurring new debt by taking out a consolidation loan and you can begin to get rid of your old debt on your own.
