Why doesn’t debt consolidation work?

Debt consolidation doesn’t work because you end up paying about the same amount. The truth is that you cannot borrow your way out of debt.

The way to get out of debt is to change your habits. You need to commit to get on a written game plan—a budget—and stick to it. Get an extra job and start paying off the debt. Live on less than you make. Becoming debt-free is not rocket science; it’s common sense and self-discipline.

You may be tempted by the companies that claim to be able to clean up your credit. Don’t go there. There are two basic problems with these companies. First, for purposes of getting a mortgage, going through companies that take your money and pay your bills will reflect on your credit as if you filed a Chapter 13 Bankruptcy. Secondly, only transactions older than seven years, or a mistake, may be taken off your credit report. A company that says otherwise is either lying or operating illegally.

Here are two suggestions. First, sit down with a counselor and work out a plan to get out of debt. Find counselors in your area who have been trained by Dave. Second, attend Financial Peace University—Dave’s 9-week program that will teach you how to make the right money decisions to achieve your financial goals. Find a class in your area.