Your application for a debt consolidation loan has just been approved and, now, you have a large sigh of relief and you prepare to go out and celebrate at your favorite posh restaurant. No, that is not the way to get out of debt! Loan approval is just one step on the long and difficult road to pull yourself out of the debt quagmire. If you do not learn to prioritize and change your spending habits, the consolidation loan will be just one more debt adding up to the pile. Find more information here - http://www.toptenreviews.com/money/debt/best-debt-consolidation-companies/.
Use Each Dollar to Repay Your Old Debt In Full
Perhaps you are tempted to put a few dollars aside from the debt consolidation loan and buy yourself that nice pair of shoes that you like so much. Do not do it! Every single cent of the new loan must go into repaying your old debt. Do not leave one single credit card unpaid in full.
Debt has the tendency to accumulate unnoticed because people consider that “it is not critical” to pay this or that right now. Instead, the money is spent gratifying a momentary whim. Well, this is exactly how you started getting into debt in the first instance.
Cut Up Your Credit Cards
Now that your credit cards are paid in full, you may be tempted to use them again. Usually, during the first period of elation after getting out of debt, people are unable to resist unplanned and impulsive purchases. It is better to remove the temptation completely because you are not as strong as you think you are. If you start spending money from your credit card again, that debt consolidation loan was made in vain…because, in a few years, you will need another one.
In addition to destroying the cards themselves, you should also go to the bank and terminate the agreements for the credit cards. Once the entire amount you owe is repaid, you can do that without any penalties. Credit card spending is the simplest way of getting in debt. You need to learn to manage with your available finances and rebuild your credit score.
Seek Financial Advice
There are many websites and forums offering free advice to help you learn how to manage personal finance. There are also counseling classes for people who struggle with these concepts. If you really want it, help is available and affordable. You have got to reprieve from living in the vicious cycle of debt by obtaining the debt consolidation loan – take advantage of it and do not repeat the same mistakes all over again.