If you ever need the right answer to a question, all you have to do is ask someone who knows. This week, I got some great advice from experts on how to consolidate my debt.
That advice came out of the blue and very early in the morning, just as I was getting out of bed and walking to the front door to get the mail. Along with a few bills, I got one of "those" bright yellow envelopes with red letters. You know the kind—it was just sitting on the floor for me. This envelope had the words "Open Now" written on it. So I did, and you can imagine how surprised I was to find that it was yet another request for me to borrow money.
The person who wrote this ad really went for it. In the envelope, there were about six slips of paper with information about bonuses and pictures of tempting piles of money. I also found a nice "Did you know?" sheet with some interesting facts, like the fact that the average debt in the UK is around GBP8,577 and that almost half of the adults in the UK worry about money. You can't say anything against that. All of it is good information that is aimed at you and meant to help you understand your own situation.
When I looked at the main part of a very long sales letter, it said, "Imagine waking up one day knowing your finances are taken care of for good."
I don't think this sentence is meant to mislead the reader, but it does show the problem with debt consolidation loans: they don't solve your problems for good; they just spread them out over a longer period of time. If you get the loan with the lower monthly payments but keep spending what you have left, things will get even worse.
At the bottom of a well-written sales page, there is always something that looks like a check with instructions to fill it out with the amount you want to borrow, tear it along the dotted line, and put it in the free mail. This is like giving someone who is trying to quit smoking a pack of cigarettes, a match, and the instruction to smoke as many as they want.
If you have debt problems, the last thing you need is an imaginary check waved in front of your face.
But the best advice about borrowing money to get out of debt comes from the loan company. At the very end of the letter, there is another factual statement: "If you want to combine your debts, you will be extending the time you have to pay them back and increasing the total amount you have to pay back." The company that sent this material deserves credit for making that part very clear and right.
If the company that will lend you all this money says it's not such a good idea, don't do it. Then that is great advice from The Lender, who is an expert on debt consolidation and really knows what they are talking about.
