How to Behave After Debt Consolidation

By Kelly Richardson
LoanPage.com Columnist

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One of the worst things that you can do after a debt consolidation move is to continue with the same bad financial habits. If you want to keep the ball rolling in your favor, here is what you must do after completing a debt consolidation mortgage refinance process.

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Recent research shows that 66% of those who took out a debt consolidation loan acquired additional debt by continuing to use their credit cards, overdrawing their bank accounts, and/or taking out another loan. But you don't have to fall into this hopeless cycle of debt.

After You Refinance

  • » Reduce Costs. Spending less on outings and staying home, buying generic brands at the store, and reducing your driving time are all ways to make your debt consolidation count. They'll help you avoid additional debt.
  • » Set a Budget. If you've taken out a home equity loan or accessed a home equity line of credit, now is a great time to put yourself on a budget. You don't have to live like a Spartan, but having a monthly guide for spending and saving is a good idea.
  • » Refinance Again. Some home loans allow you to refinance at any given time when interest rates decline. A drop of a point or two can translate to much lower mortgage interest paid each month.
Consulting a financial planner or reputable debt counselor may give you a fresh perspective on what to do after you consolidate your debt. Sometimes the unbiased view of an outside party will put your financial situation into focus and keep you from repeating past mistakes.

Sources
MSN Money: 7 Ways to Radically Cut Your Debt
The Thrifty Scot: More Struggle with Debt After Debt Consolidation Loan

About the Author
Kelly Richardson covers the real estate scene in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.

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