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Suze Orman, in her 9 Steps To Financial Freedom, says that until you have cut up all your credit cards, you will never be able to get ahead financially. What is the solution for those of us carrying significant credit card debt? Fortunately, if you own your home, you can get home refinancing advice to consolidate your credit card debt as part of a new mortgage, which will allow you to get rid of those demanding credit cards for once and for all!

However, unless you change your lifestyle to remain within your current income, you will be unable to complete the 9 Steps To Financial Freedom. The card will run up again, and your refinancing your home will have been pointless. Worse than pointless, because you will now be carrying a larger mortgage as well as being back to the same level of credit card debt.

It is just too easy to let those balances creep back up. Just as the New Year’s Resolution diets disappear before the end of January, and 90% of gym members never show up at the gym, most people’s resolution to live within their means doesn’t often last beyond the first unexpected bill.

You see, refinancing your home is not the whole solution. The instant relief from lowering the interest rate on your credit card balances - escaping from the dreadful credit card rate to the merely nasty mortgage rate - is not a solution to the problem; it is merely spreading the pain over 30 years. You can’t take that feeling of relief as an indication that your work here is done.

Following the 9 Steps To Financial Freedom involves much more than simple financial restructuring. Suze Orman makes this clear. The first steps are all internal. You really need to restructure your mind, and then your habits, and eventually your financial results will follow.

If you get good advice on refinancing, you will hear the same thing. Use refinancing your home by all means to improve your immediate situation, but don’t just allow the cards to run up again, or you will be in a worse position than before the refinancing your home. Anyone giving advice on refinancing will tell you that there is an inevitable end to that particular merry-go-round, and the more times you have gone around the process, the more painful it will be when you hit the brick wall - when you no longer have equity to extend your mortgage any further. The power of refinancing your home depends on constantly rising house values, and in today’s market, more and more people are hitting the refinancing your home wall.

By all means use mortgage refinancing to get yourself some valuable breathing space, lower your monthly interest bills, and clear your credit card debts. But don’t stop there - cut those cards up, and resolve never again to buy anything on credit. Grit your teeth and bear the short-term pain of adjusting your expectations. The end result is worth it.

Tags: Financial, Money & Loans //