“If I move all my credit card debt to a HELOC or consolidate it into my refi, I’ll save a ton of money and the payments will be lower”

Read the Original at

April 28th, 2006

As with any credit card debt solution, there are conditions that need to be met in order for this to work correctly. Of course, the biggest one is that you absolutely must stop charging things to your credit cards. Financial responsibility is the only way to solve financial problems, no matter what strategy you use.

No matter what strategy you use to work your way out of credit card debt, you need to stop spending on your credit card once you start your program. Too many people think that a HELOC, or a 0% balance transfer will be the ‘magic bullet’ for their debt problems. I wish it was that simple, but it isn’t.

Why not? Because the best way to get out of debt is (and has always been) budgeting, and not using credit for the wrong reasons. 0% transfers and HELOCs are financial tools. Tools need to be respected and used properly. If you’re in a hole, the worst thing you can do to yourself is pick up a shovel and start digging again.

If you cannot be financially responsible, please do not add additional debt to your home to ‘zero out’ your cards. I have seen far too many people lose their homes simply because they picked up a shovel when they simply needed to climb the ladder.

Entry Filed under: Financial Myths
Related