But they don’t tell you that it will now take you six years to pay off the loan.
This may not sound that bad until you realize how much more you will actually pay in additional payments. Commit to getting on a written game plan and sticking to it.
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.
So if you stay in debt longer, you get a lower payment, but then you pay the lender more.
This means you paid ,688 more for the “lower payment.” Not such a good deal after all.
Debt consolidation seems appealing because, in most cases, there’s a lower interest rate on parts of the debt, and it usually includes a lower payment.
But, in almost every case, the lower payment exists because the term gets extended, not because the debt is less.
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.
Many people try debt consolidation, but not all emerge better off.