Many people have the mistaken notion that they can get out of debt through borrowing more money. Unfortunately this is an incorrect notion. The only way to get out of debt is to eliminate the debt all together by paying it off. Borrowing more money is not eliminating debt but the process actually increases the total debt liability of the individual. To effectively get out of debt requires paying down the debt within a shorter period of time. Borrowing more money only increases the amount of time in debt and the total amount of debt.

Here’s a good example on how borrowing more money will not allow you to get out of debt anytime soon. If a $25, 000 credit card balance is paid off using a home equity bill consolidation loan payable over a 20 year period the total debt will be increased almost 100%. You can expect to make monthly payments around $200 on a $25,000 debt. These payments will have to be made for 240 months. Your total amount of payments will be $48,000 over 20 years. That’s $48,000 in debt liability compared to the original amount of $25,000. Did you just get out of debt or did you actually increase your debt? Obviously it’s an increase in total debt not a reduction in debt.

In an attempt to get out of debt through borrowing a higher amount of debt was actually incurred. The new debt was created by adding $23,000 in interest charges onto the original loan amount of $25,000 for a grand total of $48,000. Is that a reduction or an increase in debt? Obviously it is an increase and in the end an attempt to get out of debt through borrowing only creates additional debt. Even if some institution was insane enough to pay off your credit card interest free you would only decrease your debt equal to each month payment that was made against the debt.

The big secret to get out of debt is to pay the most on the debt in the shortest period of time. The answer is not borrowing from Peter to pay Paul because it won’t pay down the debt. This will require that you pay substantially more then the minimum payment each month. Of course this is hard to swallow for some but remember as each month goes by the interest on credit cards increases the total amount of the debt. Making some tough choices and paying down your debt is the only way to effectively get out of debt and stay there. Prolonging the reduction of debt by paying it down only increases the total amount of debt over time. It will be difficult as debt repayment is tough for many but sooner or later it will have to be done.