Credit Problems Can't Be Solved with More Credit
 by Harvey Cobb, Consumer Credit Counselor

When consumers run into cash flow problems, the first thing that comes to mind is a consolidation loan.  But is this a real solution or a temporary fix?  

It depends.

Debt consolidation loans are often unsecured loans or second mortgages.  Unfortunately, it may be difficult to get a signature loan if  you don't have perfect credit history.  Also, most financial institutions determine the interest rate based on your credit report--the worse the rating, the higher the interest.

A second mortgage, or home equity loan, is secured by your home.  However, if this is your only shelter, you may want to give this option some thought.  The interest rate may be lower, and you may have longer to pay.   But if you have more cash flow problems down the road, it's possible you may lose  your home to the lender

THE OBSTACLE IN OUR PATH

In ancient times, a king had a boulder placed on a roadway.  Then he hid himself and watched to see if anyone would remove the huge rock.

Some of the wealthiest merchants and courtiers came by and simply walked around it.   Many loudly blamed the king for not keeping the roads clear, but none did anything about getting the big stone out of the way.

Then a peasant came along carrying a load of vegetables.  On approaching the boulder, the peasant laid down his burden and tried to move the stone to the side of the road.  After much pushing and straining, he finally succeeded.

As the peasant picked up his load of vegetables, he noticed a purse lying in the road where the boulder had been.

The purse contained many gold coins and a note from the king indicating the gold was for the person who removed the boulder from the roadway.

The peasant learned what many others never understand:

Every obstacle presents an opportunity to improve one's conclusion.

Don't let opportunity pass you by!

No matter which loan you get, it does not change the amount that you owe.  Often it's better to meet the problem head on.  Stop using credit, and develop a plan to pay off your debt.  Talk to a professional credit counselor and find out what services are available to you

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