Debt Consolidation

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Author:
Dave Ramsey

Debt Consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom.

Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. he reason that we do not use debt consolidation is because it doesn't work.

The Truth About Debt Consolidation
A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78 percent of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt.

Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, BUT you pay the lender more, which is why they are in the business of debt consolidation.

The Real Way to Get Out of Debt
The way you get out of debt is by changing your habits. You need to commit to getting on a written game plan and sticking to it. Get an extra job and start paying off the debt. Live on less than you make. It is not rocket science, but it is emotional, which is why most people need help getting through it from someone like Dave Ramsey. Don't try debt consolidation!

This content is provided by DaveRamsey.com and may be used only in its entirety with all links included. Dave Ramsey is changing the face of America by helping people beat debt and build wealth with his bestselling book, The Total Money Makeover, and nationally syndicated radio show, The Dave Ramsey Show. Read more of what Dave says about debt consolidation.

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Debt Consolidation... Has the Time Come for Debt Consolidation Counseling? Debt consolidation may take many forms. There are those with excellent credit who have a high level of revolving credit debt and decide to consolidate for convenience and the possibility of receiving a lower interest rate. Some people who have less than stellar credit but also have accumulated equity in homes they own choose to consolidate via a home equity debt consolidation loan. Still other individuals may find themselves being consumed by debt. People such as these are often living paycheck to paycheck, dreading the mail and avoiding answering the phone because the call is often from a bill collector. Many of these people are too embarrassed to seek help in consolidating their debts. They may also feel that there are no options for them. In these days of easy credit offers and rampant consumer expectations many, many people find themselves drowning in high interest debt. You should not be ashamed if you are one of the people to whom this has happened. There are ways to climb out of the high interest consumer debt hole. Debt consolidation counseling is one of the best and most successful ways of tackling this problem. High interest revolving debt can become an unending cycle of late or missed payments resulting in even higher interest rates and payments. Further, impending laws require credit card companies to raise the mandatory minimum payments on credit card debt. Not paying these new minimums in a timely fashion will result in still larger payments and increased interest rates. All of which will further deteriorate your credit. If you find yourself in this situation it is imperative that you seek debt consolidation counseling. True debt consolidation counseling differs from a simple debt consolidation loan. Debt consolidation counseling enables you to...