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3 Big Mistakes People Make Before Consolidating Debt & How to Avoid Them: The debt consolidation process can be very enticing since it consolidates all your debts into one payment. Some of the biggest mistakes people make in this process is not knowing where they currently stand with their debts. It may seem so overwhelming that one turns away from taking a look and seeing where they stand. That's a part of why debt consolidation can become so enticing. People who turn to this method should have a clear snapshot of where they are, who they are choosing to help them, and do their homework before making this decision. Although we want to believe any professional service will be there to help us, there are many less than reputable companies that can end up not only becoming costly, it can reek havoc on your personal life. Be cautious in this decision and make sure you fully understand the guidelines and the company you are dealing with. In this article we will discuss some things you should know about your situation, and where you can go to get more information to help you on your journey to your first steps. -Mistake # 1- Not knowing your personal debt/income ratio. Here are 5 tips to get you started: 1. Know Your Debts: List all your debts and take a square look at where you stand. 2. Know Your Bare Minimum: Take a look at your income and expenses and start a plan of pruning what you can live without. 3. Know what the credit bureuas know about you: Order a free credit report to make sure you are listing all your current debts and past due debts. 4. Know Your Rights: Visit the FTC online and become informed of your rights. They also have other great free resources to guide you. 5. Explore Residual Income Sources: See if there are any avenues of residual income you can add to increase your monthly income (working part time, sales, etc.). -Mistake #2- Turning Over Your Situation and Turning Away We have heard the stories, and many have experienced it, that once one emerges from debt, they simply rack up the debts again. One way this happens is by turning over your situation to others hoping it will disappear on its own. By turning away from the situation the root of the problem still exists- your current spending habits. When we step in and take responsibility for our debts (regardless of doing debt consolidation, or pursuing becoming debt-free on our own), we have the gift of clarity. We see the patterns that led to the problem in the first place and are able to simply plug in "new habits" with "old habits" that can quite literally catapult the speed of turning our financial lives around. It's a crucial life changing step. -Mistake #3- Trying to find the easy way out. This is perhaps the most expensive mistake one can make when trying to emerge from debt. We want the big mess to go away right now and we hope their are very little consequences for them. We even bargain the idea that debt consolidation or bankruptcy ruins our credit, reeks havoc on our lives (including our families), and will pay a toll for quite some time. There are plenty that will appeal to the emotions of taking away the problem for you with a price. So we try to take the easy way out and go with a company that makes it seem the easiest- rather than taking the time to weigh all options. Big mistake. Be very clear on any decision you make in this process. To find out more about this process, I recommend getting my free ebook (offered for a limited time) at my lavish cheapskate secrets site. This will give you more free tools to help you in the process.
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Ardy Skinner is the author of "The Lavish Cheapskate- Everyday Strategies to Free Up Money and Recession-Proof Your Life!" As a single mother, she Emerged from over $70,000 of credit card debt alone to becoming debt-free- and ventured into buying a home, buying other real estate and realized the power of making passive income on her own. She shares free information on how to avoid the most costly mistakes in debt elimination, and how to avoid them. She also shares great tips on the quickest and easiest path to becoming debt-free on your own with her everyday money saving strategies. To get your Free E-book- "20 things You Absolutely Need To Know Before Consolidating Debt" Go to: www.lavishcheapskatesecrets.com Copyright © 2010 Lavish Cheapskate. All Rights Reserved.
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