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Barring additional income, debt consolidation may help
By Marvin Milner on Apr 29th, 2010
Suddenly coming into more monthly income may make consumers wonder what to do with the additional funds.
Such was the case with a reader of Liz Pulliam Weston's website, who wrote the personal finance expert saying he and his wife were selling their home and moving in with their parents. The savings from mortgage payments will amount to $5,000 a month, and the couple has $20,000 in credit card debt to contend with.
Pulliam Weston noted that the couple should concentrate on trying to pay off the credit card debt. Once that's done, they should set up an emergency savings account, which can help with unexpected expenses.
"It would be easy to ratchet up your spending now that there's so much extra money in the bank, but resist the urge," Pulliam Weston wrote.
She added that trying to save money and pay off debt may help the couple avoid living beyond their means, which may have been the case given how much debt they had on their credit cards.
Other consumers who are dealing with credit card debt may not have the fortune of having their incomes diverted away from an old mortgage. However, debt consolidation may be able to reduce how much interest these people pay, which could cut down how long they stay in the red.
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