-McDonalds big family guy video-
Here’s a video I took of someone near a local McDonalds in Charleston, South Carolina. A lot can be learned about consolidating debt just by looking at the situation of others. The key is tackling the debt problem before it grows too big. Anyway, as a father of 4 kids, it’s obvious that the man in the video has seen his share of difficult financial situations. He has a good point to make in regards to the current cost of living index. He is just barely able to get by and the minimum wage has stayed the same despite promises to raise it. Here’s a scenario that is something he has likely faced many times.
One day a man’s wife comes home and tells him that she lost her part-time job. His salary isn’t enough to raise a family so they start putting groceries on a credit card while the wife does some frantic job searching.
What would you do in this situation in order to feed your kids? Would you let them get skinny or would you use your credit card? I think we would all say that we would use a credit card until the wife finds another job. Fortunately, in a country like the US, we can consolidate our debts so we don’t have to hide from loan sharks. And how amazing it is that all we have to do is go through the daily junk mail in order to find a few credit card offers that could help us save thousands of dollars over time.
If you compare the rates of these offers and those of traditional home equity loans, you will find an interesting paradox. A typical teaser rate of a credit card is 0% for 6 months and it’s not even a secured loan. A home equity loan is safer for a bank because it’s secured to your house. The low end of a common home equity loan is around 7% to 8%. Folks, this means that if you have a job and relatively good credit, you can move your debt from card to card. Just doing this twice can mean a 0% interest rate for an entire year.
The enemy of your success is inaction, letting each month pass by without addressing the issue of your debt. It’s easy to fall into normalcy bias and avoid your debt problems which are looming in the background. By being nimble and proactive you can consolidate your debts a few times without letting the banks gauge you. So are you prone to being diligent or slothful about managing your life? I guarantee that I could find out just by looking at a person’s credit report.