Debt Consolidation: The Truth Behind The Con

October 26, 2009 | Posted by Brad Chaffee

Have you ever considered using debt consolidation, or any of the similar buzz words, to eliminate debt? Some call it debt solutions, debt relief, debt settlement, or even debt help, but regardless of how pretty the gift wrap is, they are the same.

You pay someone else to eliminate your debt. That doesn’t sound like a bad plan, well all except for the “pay someone else” part.  I am convinced that you have better options available to you, and the best part is, it does not cost you an arm and a leg.

What is debt consolidation?  It is a CON, where someone else convinces you that they can pay down your debt faster than you can.  They also claim to have some special power to magically erase some of your debt, saving you money in the process.  While there might be a half an ounce of truth to those claims, there is something you should know. (It’s only true if you lack any effort.)

Regardless of what you have been told you have the ability to:

• pay off your debt faster than anyone else – The truth is that when you do it yourself, you avoid the  fees and charges in the name of receiving help.  By not paying those fees, you have more money to throw at your debt.
• negotiate settlements with your creditors – Believe it or not, the companies that promise to save you thousands, don’t want you to know that you have the same ability to negotiate your debt.  The only difference is that they do it for a living—that’s it.
• learn how to manage your finances yourself – By paying off debt yourself you are forced to change your habits and be more involved in the management process.  This increases the likelihood of you making the changes permanent.  When someone else does it for you—you learn nothing.

I bet you didn’t know that by using debt consolidation as your solution, it effects your credit score the same as filing bankruptcy.  Well it does!  Statistics show that you are more likely to return to your current level of debt.  Why?  Because you took the easy way out by letting someone else manage your finances for you.  Creditors are very aware of the fact that by pawning your responsibility over to someone else—you learned nothing.

The saying “no pain, no gain” rings true.  Getting out of debt yourself takes sacrifice, commitment, and discipline which is painful to those who work through it themselves.  Using a debt CONsolidation company takes NO EFFORT, and that is why it rarely ever works in helping people transform their financial situations.

Do what works!  Do it yourself!

Become debt free by taking control of the habits and behaviors that got you there in the first place.  Freedom is worth every sacrifice, and the sense of accomplishment goes a long way in helping you remain debt free.

Good Luck!

Brad Chaffee is the Enemy of Debt, and a regular contributor here at the Self Reliance Exchange. Brad has also become debt free by paying off $26,076.75 in just 20 months. Learn more about Brad by reading his bio. You may also contact him here.

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Categories: personal finance | Tags: debt consolidation, do it yourself, pay off debt, self reliance | 1 Comment »

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