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Is debt consolidation a good way to get out of debt?

Dave Says

Dear Dave,

Is debt consolidation a good way to get out of debt?

Erikah

Dear Erikah,

No, it’s 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 big reason debt consolidation isn’t a good idea — It makes you feel like you truly did something to change your whole financial outlook when you didn’t. When you move things around or suddenly have a lower payment each month, you end up thinking you’re making real progress. The thing is you didn’t do anything to address the actual problem — which is you.

I meet people and talk to folks on my radio show all the time who don’t quite grasp this. They’ll tell me they paid off all their debt by using a debt consolidation company or taking out a second mortgage on their homes. Well, the truth is they’re not debt-free. They didn’t do anything but shuffle the same old debt around.

Personal finance is 80% behavior, Erikah. When it comes to getting out of debt, staying out of debt and getting your finances into shape, you have to change your habits and behaviors with money. Interest rates aren’t the problem, and the number of payments you’re facing isn’t the problem. 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 debt out of your life once and for all, you’ll never make any real progress toward gaining control of your money!

— Dave

Dave Ramsey

About Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored several best-selling books, including "The Total Money Makeover." The Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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