| In many cases human nature is expressed as | | | | Short term adjustments may include paying off |
| impulse before thought or in economic terms | | | | your debts one by one, in a timely and an |
| buy now, pay later. The character of deferred | | | | orderly fashion. Acting quickly to inform |
| payment is complicated by convenience of | | | | your creditors makes it easier to negotiate |
| credit cards, loans and mortgages. In every | | | | adjustment of your payments that may in turn |
| case the economic theory is based on an | | | | get reduced rates, waived fees / late |
| assumption that you can afford to make the | | | | charges, etc. where possible. |
| payments of principal and interest on a debt | | | | |
| without change to your present ability to | | | | Another popular way to get back on track is |
| earn an income. | | | | to consolidate your debts into one loan and |
| | | | pay it off with lower monthly installments. |
| However, reality teaches us that theory is | | | | There are many different ways to consolidate |
| not the same as practice. Our circumstances | | | | debt. The most important step in this |
| are always changing. For example, unforeseen | | | | direction is to shop for the best terms and |
| market changes like in sub-prime mortgages, | | | | lowest interest rate. Terms are usually |
| job loss, injury, or illness can change your | | | | connected to collateral or what assets you |
| ability to pay your debt in an instant. | | | | have to secure your loan principal. You'd be |
| | | | surprised to discover that terms of |
| Other human characteristics that contributes | | | | collateral vary even more than interest! |
| to unmanageable debt includes not knowing how | | | | |
| to budget, not sticking to a budget, | | | | The best case scenario in a consolidation |
| emotional roller coaster type of binge | | | | loan is to get enough money to cover all your |
| spending, shopaholic behavior needing to buy | | | | debt at a rate that you can afford to pay and |
| special offers, big discounts, or new stuff | | | | terms flexible enough for future adjustments |
| like tech toys, clothes, games, etc. without | | | | in payment up or down. In some cases this may |
| regard for ability to pay. | | | | be as simple as getting a line of credit or |
| | | | extending one enough to get back on track. |
| In order to get out of debt fast you must | | | | |
| recognize the fact of planned and unplanned | | | | The worst case scenario is bankruptcy because |
| change. You must be able to adjust your | | | | you lose credit worthiness and it will take |
| spending up or down according to your | | | | years for you to rebuild your credit after |
| circumstance. The sooner you can react to | | | | discharge. The few opportunities for credit |
| change and forecast adjustments, the easier | | | | after bankruptcy are undesirable because they |
| it becomes to manage and ultimately eliminate | | | | tend to lock you into a debt payment rut that |
| your debt. | | | | can multiply the years and increase the cost |
| | | | to become debt free. |