Many people seem to forget when taking out a credit card or loan that they already have financial commitments that they must pay.
Many people seem to regard their debts as totally separate entities totally unrelated one to the other.
When the individual arranged the $220,000 mortgages which they could easily afford at the time they could in fact afford it that is if they had stopped simply at the new mortgage.
However, after moving into the new house that they arranged the mortgage to buy, they fully recarpeted the property and bought all new furnishings for the public areas and the bedrooms.
The garden was replanted and patio pots planted with little rose bushes.
A new conservatory was built and decking installed outside the patio doors leading on to the rear garden of the property.
To suit and fit in with the new upmarket neighborhood there is now a flashy sporty car sitting at the door in an attempt to keep up with the neighbors.
As such there is more than $220,000 mortgage to be paid every month and the credit card at 5,000.
It is now $15,000 hire purchase for the new furniture, the $10,000 hire purchase for the floor coverings, the home improvement loan of £17,000 for the new conservatory in addition to the car loan of $20,000 and the loan to pay for the decking cost $5,000.
This gives debts totally $72,000, and it is all very well that the new house is nicely and comfortably furnished and there is a smart-looking car in your driveway but when the repayments of all these debts are totaled up the monthly sum being paid out each month is staggeringly high.
There are people who can afford the repayments but the majority cannot. $72,000 is a great deal of debt and after a while, most would struggle with the repayments.
Credit cards have interest rates normally in excess of 20% to more than 40% and the home improvement loan if arranged by the home improvement company will have an interest rate of about 25%.
Happiness flies out the window and puts family life in chaos when debt problems become pressing.
Laboring under a burden of debt and even having to remember on which date in the month the numerous repayments have to be made becomes a burden.
Before the whole debt problem becomes intolerable, help should be sought in the form of debt consolidation.
Debt consolidation can be arranged by means of a consolidation loan whereby all the numerous pieces of debts are rolled into the one monthly payment and the combined debt of in this instance. The whole consolidation sum is put into one single repayment and the debt consolidation incurs an interest rate in the region of 9%.
Consolidation loans come with good interest rates that are in fact a fraction of the rates for personal loans and credit cards and debt consolidation is very cost-effective.
A remortgage can also be used for debt consolidation and a remortgage works in exactly the same way as a consolidation loan by combining all the other debts into a single much lower monthly payment monthly.
Think carefully and decide if you really can easily afford the repayment before taking on debt.
If this advice is too late the next best course is to seek debt consolidation help.