My wife wants to use a debt consolidation company to pay off $ 20,000 in debt, but I’m against the idea

Dear Dave,

My wife and I made a resolution this year to pay off $ 20,000 in credit card debt that we have accumulated. I want us to follow your plan and live on a very tight budget. She wants us to use a debt consolidation company, like some of her friends have. I’m really against her idea, but how can I change her mind?

Blake

Dear Blake,
I’m glad you made the decision to get out of debt and take back control of your finances. When it comes to this sort of thing, it’s wise to remember that there is no magic pill. No debt consolidation company will get you out of debt and help you out. The answer is to learn to control yourself and your behavior with money.

Using a debt consolidation company sounds appealing because there is usually a lower monthly payment or lower interest rate. The problem in most cases, however, is that the lower payment or interest rate only exists because the term is extended. You might pay a little less each month, but you’ll end up staying in debt longer.

There are also other problems associated with using debt consolidation companies. On the one hand, it can ruin your credit for a long time when it comes to buying a car or a house. For these reasons, I sometimes call it a CON-solidation, because the whole thing is basically a con. They make you think that you are really doing something to fix your debt problem, but the debt – and all the bad habits that caused it – are still there.

I guess your wife’s friends think that using a debt consolidation company is an easy and harmless way out of a financial mess. But sometimes you have to be an adult, admit the mistakes you made and do whatever it takes to make things right. This sort of thing is not a math problem. It’s a behavior problem. Making the decision to get out of debt and never go back, living on a very tight budget and making sacrifices, is the best way to fix this mess and learn a lesson from the process.

Live like no one else, so that later you can live – and give – like no one else. Stay away from debt consolidation companies, Blake. Doing it the right way is worth it!

Dave


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