Debt consolidation is nothing more than a con because you think you're starting with a clean slate.But the truth is the debt is still there, as are the habits that caused it—you just moved it!It’s typically considered for people who have high consumer debt.But most of the time, after someone consolidates their debt, the debt grows back. They still don’t have a game plan to pay cash and spend less.Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.Options to consolidate your credit card and other debts include a balance transfer credit card, an unsecured personal loan, a home equity loan or line of credit and a 401(k) loan.3) Confusion because of too many bills Another common obstacle to getting out of debt is when the sheer number of bills you receive makes it hard to even keep track of which payment is due on which date. While there are some real benefits to debt consolidation, it’s extremely important that you do your homework and understand there’s a wide range of options when it comes to debt consolidation loans – some are good, some are bad, and some are downright predatory.Consolidation can help with this problem by reducing the number of bills you get down to a single one. Check your rate using Ready For Zero's free debt consolidation tool.
Whether consolidating your debt is a good idea depends on both your personal financial situation and on the type of debt consolidation being considered.
They also probably haven’t saved for all of the “unexpected events,” which will eventually become debt too.
In other words, the good money habits for staying out of debt and building wealth aren’t there—their behavior hasn’t changed—so it’s extremely likely they will go right back into debt.
You can’t borrow your way out of debt in the same way you can’t get out of a hole by digging out the bottom.
Getting out of debt isn’t quick or easy, but it’s the first step to achieving lasting financial health. It simply means you’re taking out one loan to pay off a bunch of loans—or consolidating the debt to one payment.