Debt consolidation is not a solution to credit problems
Is Debt Consolidation a Good Way to Get Out of Debt?
No it is not. Debt consolidation companies try to position themselves that way, but they don’t even come close to addressing or solving the real problem.
Here’s the main reason debt consolidation isn’t a good idea. It makes you feel like you really did something to change your entire financial outlook when you didn’t. When you put things off or suddenly find yourself with a lower payment each month, you end up thinking you’re making real progress. The thing is, you haven’t done anything to address the very problem that you are.
On my radio show, I’m constantly meeting and talking to people who don’t quite get it. They will tell me that they paid off all of their debts by using a debt consolidation company or by taking out a second mortgage on their homes. Well the truth is they are not debt free. They did nothing but shuffle around the same old debts.
Personal finance is 80% behavior, Erikah. When it comes to getting out of debt, staying out of debt, and getting your finances in shape, you need to change your money habits and behaviors. Interest rates aren’t the issue, and the number of payments you’re facing isn’t the issue. The problem is the person you see in the mirror every morning.
Until you change that person and start living on a strict written monthly budget and decide to kick the debt out of your life once and for all, you will never make any real progress towards taking control of your money!