Although Free and Debt Consolidation Don't Rhyme, They Do Sound Good Together

A Credit Article Contributed by Mark Mcclelland

Although Free and Debt Consolidation Don't Rhyme, They Do Sound Good Together

Although free and debt consolidation don't rhyme, they do sound good together

In the World of Debt Consolidation, is Anything for Free

Although free isn't necessarily the first term that comes to mind when you're undergoing a bit of debt consolidation, it certainly isn't one that you should ignore altogether. For example, there are both for-profit and not-for-profit organizations that will help you complete a debt consolidation program. And while you know that the process isn't going to be pain free, you can be certain that the financial freedoms you'll have post debt consolidation will certainly make you feel like a free man.

Aren't Non-Profit Debt Consolidation Agencies "Free"?

Well, the quick answer is yeas and no. Depends on which side of the coin you're looking at. But before we go into that, it's important that you understand how, in general, these agencies work.

First off, when you decide that you're going to enroll in one of their debt consolidation "programs" (they don't call them plans because that sounds too much like "payment plan") they collect some personal and a whole lot of financial information from you. Then they work with both your and your creditors, acting as a go-between, to come up with a payout program that both you and they (your creditors) can live with. Once such a plan has been agreed to the program goes into effect.

You make a single monthly deposit with the agency, and they disburse the funds to your various creditors according to the terms of the program. That way, everybody's satisfied. And that's it. As far as you can tell, the service the agency id providing is free of charge to you.

But for the most part, the people who work at those non-profit agencies don't do it for free. Even though the agency is non-profit, it still has to pay the professionals who do the work, and to do so it has to get money from somewhere. And exactly where's the "in basket" for the funds to pay these folks? Well, it stands to reason that it's the deposits that the debt consolidation program participants make.

After Debt Consolidation, You'll Discover a Whole New Meaning to the Word "Free"

Be that as it may, the amount they take to cover their expenses is still a whopping good deal for you. At least you know that they're not sending the corporate executives to the Bahamas for lavish vacations or renting out entire islands for birthday parties.

The freedom and elation that comes with financial independence - and this doesn't have to mean that you're wealthy or anything, but simply that you don't owe anybody any money and are able to easily live within your means - is difficult to describe. You can simply pay cash for everything, because you'll have cash to spend.

But you're also free to dive back into the debt pit if you want. You can sign up for a whole new set of credit cards, and max them out just like you did before. This freedom thing is a double edged sword; yes it feels great, but you also have to be wary that you don't get lazy and fall back into the spending habits that sent you to the debt consolidation agency to begin with.