I know you have seen your share of debt consolidation commercials, tempting you with the best “get out of debt” slogans money can buy. Some even claim to be free non profit debt consolidation companies offering their services for free. While there are legitimate companies out there, most of these emails and snail-mails you get are scams. Just people looking to take advantage of other desperate to drop the burden of their debt. As for the legitimate non profit debt consolidation companies, their debt solution methods are flawed. Most just make it seems as if they have helped lowered your debt to request a donation, when you will actually end up paying much more in the long run.
Here is how it works: The method requires you to take out a low interest loan which usually stretches out your payments for longer than your current payments. You use this low interest loan and pay all your current debts and now you only have one low monthly payment.
Here is what you should know: The universal first rule of becoming debt free is to stop acquiring more debt. The new loan you just took out with its low interest, just broke to first rule. Interest is the sole reason your debts take so long to pay off. The longer it takes to pay off any loan the more you pay in interest. If you owe $10,000 on all your debts combined and it would take you 5 years to pay off at your current rate of payment. Getting a loan for $10,000 at an interest rate even half your current interest rate will cost you more and take longer to pay off. On top of all this you will not gain the knowledge required to stay out of debt once you do get out.
Here is what you should do: Take the time to learn real debt eliminating methods such as the debt snowball method and building up an emergency account. These techniques will not only get you out of debt faster and completely, it is more likely you will stay out of debt forever. Non profit debt consolidation companies have there place, but 90% of people in debt do not need them.