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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
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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!
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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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