Debt consolidation? No thanks.
You’re in the right place if you are interested in getting out of debt completely and exploring consolidation as an option.
Consolidating debts is merging individual debts into a single debt. Sounds better to tackle one problem vs. many, right?
What entices people to consolidate:
The math feels better - less paid in interest over time, lower monthly payments, having only one end date to think about vs. multiple
Sense of control and simplicity with a promise of less anxiety, shame, embarrassment, etc.
If you’re already leaning towards consolidating, it must be paired with good money habits -
Consolidation is a tool, not a solution. So, consolidation could be used as a tool to get out of debt, only if you have the discipline (day by day, month by month) to avoid new debt completely and budget consistently.
Consolidation could work, but keep in mind:
It’s moving your debt around, not getting rid of it.
It’s a quick, “fix it fast” approach solely focused on math, not your lived experience (we’re faulty creatures, we humans).
It doesn’t address the root of the problem - what got you in debt.
It could tempt you to rack up more debt and make an even bigger mess.
But there’s another option that gets you out of debt, improves your financial chops, and addresses the root problem at the same time -
Keep the debts separate, line them up, attack each one with gusto, and feel the wins.
Try what my family did:
Get on a budget to see where every dollar of your hard-earned income is going - this informs you how big a “margin” you have (income minus all expenses) to throw at debt.
Stop retirement contributions to add to your margin. This is temporary, you’ll turn it back on later.
I know this is a hard pill to swallow for some, but I encourage an open mind for a moment. The idea is to divert as much income as possible toward one goal (eliminating debt) vs. multiple goals (eliminating debt, investing, etc.). It took us a couple months to buy into this and we wish we decided it from the start once we immediately felt the benefit.
List your debts smallest to largest, regardless of the interest rate.
Work the debt snowball: Pay off one debt at a time, starting with the smallest. Each win gives you momentum and peace. Consolidation? It drags on—with no wins until the very end.
Never take out debt again! Use cash or debit only.
I always encourage my clients to explore Dave Ramsey’s Baby Steps—especially Steps 1 through 3—as a foundation for building strong financial health. Following these steps helped our family get on solid ground, and now we can’t help but laugh at how differently we view debt whenever we see a credit card commercial. It’s a reminder of how far we’ve come—and how much our lives have changed.
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Wealth and Wisdom Coaching, LLC, based in Bellingham, WA, offers compassionate financial coaching to help you find clarity, confidence, and lasting peace with your money. Wherever you’re starting from, you’re welcome here.
