No one ever wants to be in a debt trap forever, but it happens, and at that point, when there are no other options left, debt consolidation seems to be the answer—or not? It can help you regain control over your finances temporarily and stop letting that debt destroy the quality of your daily life, right?

Admittedly, debt can occur through unexpected medical bills, education expenses, credit cards, personal loans, cars, and home ownership. If you have not been able to handle the debt yourself, it is first important to assess your financial situation and the total amount of debt to determine the best way to pay it off.

Entering & signing a debt consolidation loan
Be careful before signing the Debt Consolidation Agreement

Debt consolidation is more than likely the way to go as compared to other options, including debt counseling, sequestration, or bankruptcy, and it should be considered, but you very well could handle your debt on your own, which is why it is important to evaluate your financial situation. But be warned: with credit cards and debt piles, it’s a dangerous time for many people.

Bottom line… It’s a bad idea.

I’m sure you’ve heard and seen the advertisements.

“Consolidate your debt and pay less each month.”

“Consolidate your debt—your life will be so much easier with just one smaller payment to make each month—let us help you!”

Debt consolidation is so appealing because there is often an “irresistible offer” of lower interest rates on some of the debt and a lower combined repayment. 

However, in almost every case, we find that the lower repayment exists not because of the lower interest rate but because the repayment term has been extended.

Expecting to get out of debt by borrowing is insane!

Included in your evaluation of your options and the best route to take in paying off your debt is the importance of understanding the basics of debt consolidation.

Simply put, debt consolidation is the process of totaling ALL of your outstanding debt and assessing your situation to determine how much you can afford to pay toward this debt each month. Look at your income, total monthly debt, total monthly payments, and the total amount of debt to be included in the debt consolidation.

The requirements for a good consolidation loan are as follows:

  • The cost (the interest rate) must be less
  • Consolidation loan must be able to take care of medium-term needs
  • Repayments must be within reason and not excessive compared to your income
  • Existing debt must be settled and those accounts closed
  • Don’t replace long-term debt with short-term credit.

However, debt consolidation is a lousy concept and risky because it deceives people into thinking they’ve taken action to address their debt issues when all they’ve actually done is switch places with their financial problems as the debt ship continues to sink.

Consolidating your debt is similar to tidying and organizing your home by sweeping up a large amount of dirt (debt) under the rug. Expecting to get out of debt by borrowing is insane, it is as if you were pulling “junk” from beneath your bed and stuffing it neatly and flawlessly into cabinets while fooling yourself into thinking the problem is fixed.

sinking further into debt
Sinking deeper into debt without assessing the extent of the financial situation

You’ve only convinced yourself that you’ve resolved the issue, but the “stuff” is still taking up room in your home, draining your energy, and costing you time and money.

When you notice a wonderful empty space in your home, you immediately go buy additional things to fill it up with!

If you attempt to pay off your debt by falling into the debt consolidation marketing hype, you will never address the spending behavior that is the true source of your debt issue.

When you consolidate your debt, all you do is stow it away in another financial filing cabinet, so you never really got rid of it.

Debt consolidation statistics show that over 80% of the time the debt grows back. 

Why? because the person hasn’t changed their behavior. 

Without a debt-busting plan—a plan to get rid of the debt while at the same time changing money habits, such as paying cash, and avoiding unnecessary expenditures—debt simply grows back again.

People who go the debt consolidation route seldom learn anything about their spending triggers, patterns, or how money actually flows. 

What should you do to address the problem?

Digging out the mountain of debt won’t pull you out of a hole in debt”

The habits and actions that caused the hole in the first place must be stopped.

Successful debt relief involves…

  • Deciding to take action by creating financial goals and reminding yourself that your life is more valuable and taking the necessary steps to get out of debt.
  • Deciding that you won’t tolerate and settle for debt in your life any longer.
  • Using a planned debt-smashing approach to pay off debt, remaining debt free
  • Acquiring wealth through adopting new financial habits that encourage saving, investing, and wealth generation.

This is not a quick or easy solution, and it is also not complicated either.

It absolutely can be done if you are prepared to deal with the behaviors, habits, and mindset that got you into debt in the first place and make the changes you need to make, to create a whole new and better financial future for yourself.

Debt Consolidation Loan Rate: Where To Start So You Can Control Your Debt, as a temporary measure.

When problems get too big, we can remain paralyzed and unable to take the very action that can save us because we don’t know where to start. Debts are like that!

When it gets out of control, it can have a devastating impact on all areas of our lives and leave us feeling shell-shocked and wondering how on earth it happened.

The biggest, most immediate issue that high debt levels cause everyone is the high monthly cost of debt servicing. These high costs are not just the result of high borrowing; they are also the direct consequence of a high rate of interest and multiple minimum payment amounts due all at once. There is no space to breathe!

To solve your most immediate problem, you need to consolidate all your debts at the lowest rate you can find. If you are lucky enough to find one offer that is transparent, authentic, and trustworthy, let’s just be honest; they are few and far between.

However, this will only give you temporary, short-term relief, a much lower installment every month but a longer payment period, and help you get your debt under control (a short-term gain for a long-term problem).

Combining all your debts into one loan with a much lower debt consolidation loan rate will benefit you on many levels. Not only will you have more money in your pocket every month, but you will also save thousands of Rands/dollars over the term of the loan and have a definite time frame within which you will be debt-free.

Calculating the best lowest rate
Calculate the best lowest rate you can find

The only proviso with regard to this last benefit is that you must cancel all of your credit cards and any lines of credit so that you cannot use them to increase debt again.

Decide to live within a strict budget that includes savings for emergencies so that at the end of the term of the loan, you will be debt-free. You will also be in a much stronger financial position.

In fact, if you save the amount of money you were spending on the loan, you will soon have wealth instead of debt. You can also consider using a portion of it to pay the debt faster. However, it requires a change of mindset, discipline, and staying power, as it will not be an easy and quick ride out.

You should next determine the percentage of your debt and consolidation total for each creditor, which is important in order to find the best offer the creditors make to reduce your payments. Lower interest rates, reduced payments, extended periods, and sometimes a reduced payoff amount are all possibilities that you should keep in mind during negotiations with creditors.

When you truly understand the impact of compounding, you know that this means you stay in debt longer and pay more! No wonder banks and debt consolidation firms love this!

Let us look at the numbers, as they do not lie!

Say you have a total of R45,000 in unsecured debt at 24%, payable over 7 years (84 months). 

A simple calculation shows that your monthly payment on the R45,000 loan is R1542.87. Congratulations

At the end of the loan repayment period, you shall have paid — just in interest — R129,600. 

That’s one hundred and thirty thousand down the drain in interest payments over 84 months. Just let that sink in for a moment!

The debt consolidation company tells you, “Congratulations! “You have just qualified to have your repayment lowered to R1157.14 per month and your interest rate lowered to 18% by negotiating with your creditors.”

Sounds great, doesn’t it?

Who wouldn’t want to pay R385.73 less per month in repayments?

But they don’t inform you or draw your attention to the fact that it will now take you another seven years to pay off the loan.

Okay, but is that really so bad?

Damn right, it’s bad! 

Let’s look at the total cost of that debt as a result of the extra years of repayment and the extra years of paying interest.

You shall have now added a total of R97,199 to settle the debt, compared to the R129,600 that the original loan would have cost you. Consider it as if you were starting from scratch with the debt. 

That’s a great deal you get with your “lower payment”—another R97,199 wasted. 

Ninety-seven thousand, one hundred and ninety-nine rands extra could have been your asset growing for you over the course of seven years. Let that sink in for a moment.

Not such a good deal for you after all.

And remember, interest rates and repayments are not some sorts of game. 
When you add up the total cost of a loan, that cash is coming out of your pocket.

❝ You can never get out of the debt habit by repackaging loans and fiddling with interest rates and payment periods. ❞

You get out of debt by committing to a solid, vigorous, and powerful debt destruction plan, undertaking to change your mindset and your money habits, understanding the emotional triggers that got you into debt and keep you in debt in the first place, and learning new ways of being great with your money and then sticking to them. You don’t have to go it alone. 


It goes without saying that sequestration or bankruptcy should be the final resort, but debt consolidation may not be something to take it lightly and jump into right away,

Whether you seek professional help or consolidate your debts yourself at the lowest debt consolidation loan rate you can find, taking this step will provide you with immediate financial relief and offer long-term savings.

The sooner you take action, the sooner your finances will be manageable in the short term, but just know that you are in it for the long haul.

Thank you for gracing us with your presence. You are welcome to leave a comment or share, this article with a friend or colleague. Just share your experience with us as to how debt consolidation has worked or not worked for you.