When folks start working on getting out of debt, a debt consolidation loan often seems like a good idea.

It makes sense on the surface, especially if you can get a relatively low or no interest loan. Why not just lump everything together so you can make one big payment each month and be done with it?

Logically, consolidating debt means that more of your payment will be going toward principal each month, allowing you to pay off your debts faster. You’ll also reduce the chance of late fees, since there will only be one payment to make.

There’s just one thing wrong with that theory, and it’s a biggie: People don’t always act logically. If we did, we wouldn’t pay thousands of dollars over the years for things we probably don’t even remember buying.

Usually the problem with debt is NOT high interest rates and late fees — those are just the things that hurt. They’re symptoms.

If you have non-medical debt, the real problem is that you’ve been living above your means for some reason. And if you’ve been living above your means, consolidating debt is almost certainly going to put you even deeper into debt — no matter how well intentioned you are.

You’ve got to fix the underlying problem first. You have to stop borrowing money. Period. For any reason.

Borrowing money is not the solution. It’s just something you’ve gotten used to doing almost automatically. The next time an emergency happens, pretend that no one will lend you money, not even the credit card companies.

What would you do then? Do that thing instead and break the cycle.

Once you’re consistently living below your means and scraping up extra pennies to throw at debt, then a loan to lower your interest rates might be beneficial.

Which would you prefer: to have $20,000 in the bank while owing $20,000 on credit cards, or to have $0 in the bank while owing nothing on credit cards?

Thinking about it rationally (and given only those two choices) it makes more sense to have $0 in the bank and owe nothing. The interest you’ll pay on $20,000 in credit card debt far outweighs any interest you might earn on $20,000 in the bank.

I suspect most people would give the rational answer, but when you look at what people really do, the results are often different.

People keep money in the bank instead of using it to pay off debt. That’s because our actions are not so rational. How we feel about money guides our choices more often than not. We feel safer with money in the bank. This is the case even though it costs us to carry debt, and even though the safety is really just an illusion. We don’t seem to get the disconnect.

Getting into debt in the first place isn’t all that rational either, especially credit card debt. Sure, sometimes there are exceptions. If one of my loved ones needed life-saving treatment and the only way I had to pay for it was with a credit card, you can bet I’d be slapping down the plastic.

But many people start their debt story by getting a credit card “just for emergencies”. Before they know it, there’s an emergency every month. Unless it causes you to be stranded without water on a summer day in Death Valley, your car breaking down is not an emergency. It’s an inconvenience.

It’s not logical to depend on potential debt for emergencies instead of saving up money or planning ahead for those (not so) unusual months. If you can’t seem to get ahead, it’s because you’re either spending more money than you can afford to spend, you don’t have enough income, or both.

Maybe it’s time to give our irrational money minds a talking to, so we can start aligning our behavior with what we know is best for us.

I borrowed about $19,000 back in 1997 in order to finish graduate school. (That was stupid and completely unnecessary on my part, but that’s another story.)

This is the story of how I paid off the balance of my student loan in less than five months.

After borrowing the money in 1997, I paid sporadically on the loan when it entered repayment. There were months when I paid nothing but interest due to the loan being in forbearance, etc. There were also months when I paid $200 per month, which was my agreed-upon larger-than-minimum monthly payment.

Then end result was that by June of 2006 (9 years after taking out the loan) I still owed $9,759.46.

By October 17, 2006 — less than 5 months later — I owed zero.

How did I do it?

It wasn’t by getting a fancy job with a big salary. (I brought home about $2100 each month.)

It was by focusing solely on that debt. For a little more than 4 months, I woke up every single day thinking about how I could pay off the debt as quickly as possible.

Could I make extra money somehow? Could I cut expenses? Could I start tracking them so I’d know what my expenses even were to begin with? Could I send in multiple payments each month to the loan in order to pay less interest? Could I get a discount on the stuff I absolutely did have to buy?

The answer to all of those questions was yes. I was consumed by paying off that debt. And it worked. The more I sent in, the more I wanted to send in, and the more fired up I got.

By the end of September 2006 I had paid off $5359.28 of the debt, leaving a balance of $4400.18.

Finally, the obvious hit me during a conversation with my husband. I was telling him that I didn’t understand why people who had the money to pay off a debt didn’t do it, when it dawned on me that that described ME. I had some money in the bank that I had been saving up for emergencies.

It hadn’t occurred to me to use that money to pay off the balance of my debt until that moment, because the money in the bank made me feel secure. But that feeling of security was really just an illusion, and I was paying more on my debt each month in interest than I was earning on the money in savings.

So I withdrew the balance of what was needed to get my debt paid off and sent it in. That’s when my life changed — the moment I felt what it was like to no longer having a debt like that hanging over my head — to be free of worry and stress related to it, and to have money to do whatever I wanted to with each month.

Do you have a debt related story to share? I’d love to hear it.