debt management in Canada has become a reasonable method of handling debt but may not be the appropriate methode for clients to administer their debt. In a lot of cases clients will apply for consolidation loans to pay off their un secured debt and start with a clean slate. even though this takes care of the current problem it oftentimes creates much larger problems later on in life. The reasons why this happens are;.

First of all, people are creatures of habit. By obtaining a consolidation loan you are only covering up the basic issue, your habits. Although a consolidation loan will pay off your original debt it wont deal with your spending habits. Usually individuals obtaining consolidation loans to pay off their debt end up with twice the debt they started with.

This being the other reason consolidation loans do not work. After people pay off their revolving credit it allows them freedom to unsecured debt, allowing the trap to repeat itself again. Often times people end up with their account maxed out again, as well as, the consolidation loan that they borrowed to pay off their debt. The most familiar comment I hear as a debt manager is “I need to receive a consolidation loan to repay my accounts”, “I dont want to use revolving credit again”. In theory this is terrific but often times doesn’t happen

Unless an individual is prepared to tackle their overall problem (i.e. their spending habits) they will not succeed with a debt consolidation loan. In actual fact this is one of the main reasons that the banks have stopped issuing debt consolidation loans. They have, for the most part, stopped this because they recognise that this is only feeding the problem and not solving the problem. If you truly want to deal with your debt, cut up your credit cards, stop access to any revolving credit, make your monthly payments to pay the debt down and track your spending. It is only through the tracking of your spending habits that you will truly understand the fundamental issues of your debt. In order to deal with your debt problems, you must first understand how you got there in the first place.

If you want to live debt free you must recognise your unnecessary spending habits and make changes to eliminate them from your life. If you were to ask me what lesson I teach my clients the most, it’s how to track their spending and identify unnecessary spending.

Greg Martin
Financial Counsellor
Phoenix Credit and Debt Counsellors
Debt Consolidation Canada