How Debt Consolidation Solutions Changed How We Think About Money

Gone are the days when if you were stuck in debt, you were stuck in debt, unless you paid yourself completely off. Today, debt management allows those struggling with overwhelming debt temporary relief, so that they can get on with their lives while paying off their debt over a period of time. One of the most prevalent of these debt management options is debt consolidation. Simply put, debt consolidation solutions, while enormously beneficial in many cases, are changing the way we think about money.

But what exactly does that mean? How exactly are consolidation solutions changing the way we think about money? The answer to that question is short and simple in essence, but quite complex to completely understand. A solid ground knowledge of what consolidation solutions are and how they can (and can’t) benefit you is an essential starting point. And that is why we’ll start with a quick breakdown of debt consolidation and how it works.

Debt Consolidation and How It Works

If you have ever been in debt, then you may have considered a debt management option like debt consolidation before. The basis of a debt consolidation solution is to offer relief to people struggling from overwhelming debt by consolidating (or combining) all of their different debts and payments into a single payment.

While the value of each debt will remain the same even after they are consolidated, many people find it easier (and numerous studies back this up) to manage one debt payment than several. It is plain to see how it can be easier to organize and pay a single monthly bill than to juggle a handful of them each and every month.

In addition to making debt repayment easier, debt consolidation solutions can oftentimes help you secure a lower monthly payment or, more commonly, a lowered monthly interest rate on your payments. An excellent example of how this works comes from the ReadyForZero blog in a post titled ‘How Does Debt Consolidation Work’ where it is written that “if you have three credit cards with interest rates of 12%, 18%, and 25%, you might be able to consolidate those three accounts into one loan with an interest rate of 10-15% – which would save you money.”

Consolidating debt can also help you obtain a lower monthly payment. This is an especially helpful benefit of debt consolidation solutions for those whose payments are out of their range. Instead of missing payments each month, incurring even more debt in the form of late fees and penalties, people can instead secure a lower monthly payment after consolidation which will help keep them on their feet. It is important to be aware of the fact that lower monthly debt payments almost always mean more money paid in the long-run as the interest builds with time.

Is Debt Consolidation Right for You?

When you are struggling to pay off overwhelming debt, it can be all too easy to jump at every opportunity to make things easier on yourself. However, before acting on a debt consolidation solution, it is of utmost importance that you think things through, and understand that the absolute most important thing you can do is reduce (and eventually eliminate) your overall debt. If you are looking for debt consolidation for another reason (say, to open up more credit options), then you would be better off going in a different direction.

To make things brief, a debt consolidation solution might be right for you if:

  • You would like to make things easier to keep track of by organizing your many different bills into a single bill.
  • You are having trouble paying all of your bills on time and need a little wiggle room.
  • You are currently bogged down with high interest rates and would like to have lower interest rates on all of your debts.

How Debt Consolidation Changes the Way We Think About Money

debt consolidation solutions

Debt Consolidate Solutions May Be What You Need

Alright, back to our original question – how does debt consolidation change the way that we think about money? Now that we know what debt solutions are and who they are right for, we can begin to dissect this question.

A lot of people view debt consolidation and other forms of debt management like settlement as an easy way out. Once they are in debt, they see it as a solution of sorts, a way to cut themselves a little financial slack. In fact, many people take this manner of thinking one step further. Instead of viewing debt consolidation as a potential solution once they are in debt, they view it as a back-up plan when making decisions that require loans.

The recent housing and economic crisis is an excellent example of the new way of thinking about money that has been forged, in large part, by the abundance of debt solutions. Debt consolidation is used frequently by people that have equity in their homes and can consolidate credit cards, vehicle payments, etc into one single, lower monthly payment. This gives them a significant break on their monthly payments – but debt doesn’t go away until it is all paid off (or their home is sold). Furthermore, many of these people who have consolidated their debt weren’t even struggling with payments; they just wanted a financial break.

And this is where the big problems with the ‘debt consolidation way of thinking’ come into play. Many people have had problems with their consolidated debt because of their home values going down. This placed them underwater with owing more money than the home was actually worth. At this time, many people had to go into foreclosure or short sell their homes. Most of the problems could have been avoided if people had thought harder about debt consolidation solutions before jumping at them.

People also continue to think of debt consolidation as a way to open up more lines of credit. Since combining all of your debt together can make it easier to pay off and put you on better footing with credit companies, many people consolidate debt for the wrong reason. As mentioned above, (in the ‘Is Debt Consolidation Right For You?’ section), you should only consider debt consolidation if you actually need it, not because you want easier access to more credit.


At the end of the day, really everything in the world contributes to the way we think about money, especially changes made to debt and debt management. Debt consolidation might seem like a solid way to lower your monthly payments, access more credit, or solve other financial woes related to debt, but it should only be considered if you actually need it, if you are actually struggling with overwhelming debt and need some room to breathe.