If you’re working on getting out of debt, don’t take advice from the wrong people. Who exactly are the wrong people? People who haven’t been there, and successfully done that.
You see, debt isn’t logical.
Pick your price
If you wanted to buy something and someone said to you, “You can either pay $20,000 for it or $22,300.20, which would you prefer?” of course you’d take the $20K price. Right?
Wrong. If you’re in debt, you’d take the higher price, because it’s “only” 60 affordable monthly payments of $371.67. (If you’re wondering where I got those numbers, they’re based on this calculator for a car loan that would be repaid over 5 years at a rate of 4.37%.)
People who have never been in debt see things differently
But people who have never been in debt would tell you that it makes sense to pay the extra $2300.20 because you can make more than 4.37% elsewhere on that $20K (and they’d have that $20K out there earning money). Or they’d tell you that they’d never borrow money because it makes no sense to pay extra for everything.
In both cases, they’re being logical. They’re also making assumptions about you that aren’t true. By definition, if you’re in debt — especially if you owe many thousands of dollars — you’re not doing the logical thing.
How you got in debt
If you’re in debt, you didn’t get there by being logical. You got there by being emotional, and/or by not planning ahead enough. You’re not going to get out of debt by being logical either.
So don’t listen to these people with all the sensible suggestions to consolidate debt or to do balance transfers in order to reduce your interest rates.
Interest rates are not your real problem. Your behavior and emotions are. And having a lower rate isn’t going to change what you do or how you feel.
Change those things first — long term — and then you’ll be able to look at things logically.