Start Consolidating debt bad idea

Consolidating debt bad idea

For instance, you probably wouldn’t want to consolidate a car loan that you’ve been paying on for four years and only have one year left.

“Through no fault of their own, sometimes people face a financial train wreck.

Sometimes, debt consolidation loan can help them out,” he says. But for those who got themselves into this financial trouble by racking up credit card debt to buy bigger and better things, then he warns that debt consolidation will not help unless bad spending behaviors and attitudes are changed. But that normally requires some kind of life change such as they get a second income with a spouse, they get an inheritance, or they get a new job with a big pay increase.

“If you’re thinking about selling your house soon, you want to be cautious about how much you spend on what because there’s a limit to how much you can get over the market value on a house,” says Sharga.

He also said talking to a financial planner, your accountant or even someone in your family who understands finances is a good step to do before signing any new loans.

But if you plan on selling the home, you need to be mindful of the types of improvements you are making to your house.

The most common mistake is when a homeowner uses their home equity to make upgrades like a large TV or swimming pool that do not really increase the value of the home, says Rick Sharga, executive vice president of Ten-X, an online real estate marketplace.

Borrowing against the equity in your home can often be a good way to get access to cash quickly.