Debt consolidation does not solve the real problem

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

A: No, it is not. Debt consolidation companies try to position themselves this way, but they don’t even come close to addressing or solving the real problem.

Here is the big reason why debt consolidation is not a good idea. It makes you feel like you’ve really done something to change your entire financial outlook when you haven’t. When you move things around or suddenly have a lower payment each month, you end up thinking you’re making real progress. The point is, you haven’t done anything to fix the real problem – which is you.

I meet people and talk to people all the time on my radio show who don’t quite understand that. They will tell me that they have paid off all their debts by using a debt consolidation company or by taking out a second mortgage on their house. Well, the truth is that they are not debt free. They have done nothing but pay off the same old debt.

Personal finance is 80% behavioral, Erikah. When it comes to getting out of debt, staying out of debt, and getting your finances in order, you have to change your habits and behaviors with money. Interest rates aren’t the issue, and the number of payments you face isn’t the issue. The problem is the person you see in the mirror every morning.

Until you change that person, start living with a strict, written monthly budget, and decide to eliminate debt from your life once and for all, you’ll never make any real progress in taking control. of your money!

More from Dave Ramsey:Pay off your debts first, then think about having fun. It’s the only way!

Dave Ramsey is an eight-time national #1 bestselling author, personal finance expert and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business and many more. Since 1992, Dave has been helping people regain control of their money, build wealth and improve their lives. He is also CEO of Ramsey Solutions.

Nancy I. Romero