The financial counselling Fantasy;
The financial counselling Myth;
credit counselling in Canada has become a accepted method of dealing with debt but might not be the appropriate methode for Canadian’s to control their debt. In a lot of cases clients will apply for debt consolidation loans to eliminate their debt and begin with a clean slate. even though this takes care of the momentary problem it constantly developes bigger problems later on in life. There are two reasons why this happens.
First of all, people are creatures of habit. By obtaining a consolidation loan you are only covering up the basic problem, your habits. Although a consolidation loan will pay back your original debt it wont deal with your spending habits. Usually People applying for debt consolidation loans to eliminate their debt end up in twice the debt they started with.
This is the second reason consolidation loans won’t help. After people pay off their debts it gives them freedom to available debt, causing the trap to start over again. Usually Canadian’s end up with their debts at the limits again, as well as, the debt consolidation loan that they took out to pay off their debt. The most typical comment I hear as a debt manager is “I need to secure a debt consolidation loan to re-pay my debt”, “I dont want to use credit cards again”. In theory this is terrific but more often than not this doesn’t happen
Unless an individual is prepared to tackle their overall problem (i.e. their spending habits) they will not succeed with a debt consolidation loan. In actual fact this is one of the main reasons that the banks have stopped issuing debt consolidation loans. They have, for the most part, stopped this because they recognise that this is only feeding the problem and not solving the problem. If you truly want to deal with your debt, cut up your credit cards, stop access to any revolving credit, make your monthly payments to pay the debt down and track your spending. It is only through the tracking of your spending habits that you will truly understand the fundamental issues of your debt. In order to deal with your debt problems, you must first understand how you got there in the first place.
If you want to live debt free you must recognise your unnecessary spending habits and make changes to eliminate them from your life. If you were to ask me what lesson I teach my clients the most, it’s how to track their spending and identify unnecessary spending.
Greg Martin
Debt Consolidator
Inspire Credit Counselling Services
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