No magic pill to pay off debt

  • Dave Ramsey

    Dave Ramsey


Dear Dave,

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

— Blake

Dear Blake,

I’m glad you two have made the decision to get out of debt, and gain control of your finances. When it comes to this sort of thing, it’s wise to remember there’s no magic pill. No debt consolidation company is going to get you out of debt and help you stay out of debt. The answer is learning how to control yourself and your behaviour with money.

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

There are other problems involved in using debt consolidation companies, too. For one thing, it can trash your credit for a long time when it comes to buying a car or a house. For these reasons I sometimes refer to it as a “con-solidation”, because the whole thing is basically a con. They make you think you’re really doing something about your debt problem, but the debt — and all the bad habits that caused it — are still there.

My guess is your wife’s friends think using a debt consolidation company is an easy, harmless way to get out of a financial mess. But sometimes you’ve got to be an adult, admit the mistakes you’ve made, and do what it takes to straighten things out. This kind of thing isn’t a math issue. It’s a behaviour issue. Making the decision to get out of debt and never go back there again, by living on a really tight budget and making sacrifices, is the best way to fix this mess and learn a lesson in 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 this the right way is worth it!

— Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey

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Published Jan 18, 2020 at 8:00 am (Updated Jan 17, 2020 at 6:36 pm)

No magic pill to pay off debt

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