One reason is that debt consolidation completely ignores reason. Consolidation needs no explanation of why you have the debt that you have. It may be the case that you find yourself in a situation you didn't see coming. This is probably not the entire picture of what really happened. Your bad financial habits are the reason that you have bought too many things on credit. In other words, you bought a whole bunch of stuff with money that you didn't have. When you consolidate your debts, you don't magically decrease your debt, you simply owe the same amount with a lower monthly payment and lower interest rate. The consolidated just debt becomes easier to pay. You don't make any more a month than what you did before, but all of a sudden you have all of the things you wanted and you can pay for it. This can put of the real problem for a while. Have the smaller payment per month, leaving you with excess money to spend on credit once again. This continued spending on credit will lead to an even bigger debt problem. This is typical with people who do not know how to manage their own finances, the consolidate so that they can spend more. This huge debt ends up becoming stretched so far that it becomes overwhelming and almost impossible to pay off. Putting off the problem of dealing with debt by consolidating is like throwing grease on the fire. It just makes the problem bigger and harder to deal with.

The truth of the matter is that debt consolidation is expensive. You may think that a smaller monthly payment and a lower interest rate can't be beat. Think again. Consolidating stretches debt out. It makes short term debt longer or longer term debt. Even though that interest rate is lower, it is taking you way longer so you are actually paying a ton more in interest dollars. Didn't think about that before didn't you? Suppose you owed $8,000 on a credit card, with 20% annual interest that requires a payment of $186.00 per month to pay it off in five years paying a total of $2460 in interest money. Now suppose you consolidated the debt into your 30-year mortgage on your home, with a 7% interest rate. This would add $40.00 to the payment. That's easier than $186, and a much lower interest rate, so how much total interest will you pay over the years? $9000. That is considerably more than your original debt. The only way to prevent this from happening is to not consolidate debt and try to actually pay it off yourself. This takes planning and careful budgeting. This can be helped by getting rid of unnecessary expenses and changing your lifestyle so that you can use the money to get yourself out of the hole you through yourself into.

While debt consolidation can help those who have no legs to stand on, if you use this option unwisely, you can actually hurt yourself financially and actually create more debt than you originally had to begin with.