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You don’t need to consolidate your bills—you need to delete them.

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Here are the top things you need to know before you consolidate your debt: But here’s the deal: debt consolidation promises one thing but delivers another.

That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.

Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt. The debt includes a two-year loan for $10,000 at 12%, and a four-year loan for $20,000 at 10%.

Your monthly payment on the first loan is $517, and the payment on the second is $583. You consult a company that promises to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay $460 less per month in payments?

Two words for you: , although often the terms are used interchangeably.

We’ve already covered consolidation: It’s a type of loan that rolls several unsecured debts into one single bill. Debt settlement means you hire a company to negotiate a lump-sum payment with your creditors for less than what you owe.

Most of the time, after someone consolidates their debt, the debt grows back. They don’t have a game plan to pay cash and spend less.

In other words, they haven’t established good money habits for staying out of debt and building wealth.

In fact, you end up paying more and staying in debt longer because of so-called consolidation.

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