Tiny Steps

Fortunately, my calculations fell at an opportune time: tax season. Having deductions for a mortgage and tuition yielded an IRS return of $5,000. It was enough to furnish a $1000, "mini" savings account, pay off the smallest student loan ($2,300).  The rest went towards the smallest credit card balance. It seemed such a small amount against the total, which grew at a seemingly voracious rate, fed mostly by revolving interest. I wanted to pay back every red cent yesterday, perhaps there was a better way: Credit counseling or debt consolidation?
It's hard to watch more than 30 minutes of television in this country without seeing an ad for loan consolidation or credit counseling.  Americans are, sadly, up to their ears in debt:
Average credit card debt: 15,263 (14.95% APR)
Average outstanding student loan balance: $31,646
Average auto loan debt: 30,738
Only 59% of Americans have more than $500 in ready cash savings. On the surface loan consolidation or it's cousin credit counseling may seem like a good idea. With debt consolidation, several smaller debts (generally with higher APR) are combined in one large loan, usually at a much lower interest rate. This allows for one payment to one creditor. Loans are ideally simple interest loans with a set payment and term (like a mortgage or car loan). The "minimum payment" in this case goes towards interest and principal, systematically discharging the debt. 
There are two obstacles to this approach: good credit and a change in financial habits. Without a shift in spending habits, debt consolidation simply frees more income to "blow" (i.e. float more debt with) perpetuating the downward spiral. I would like to think my habits have changed permanently (at least I have the best of intentions in that regard), however the culminant beating my credit had taken precluded approval for the amount ($60,000) needed to consolidate. Looking at my credit report, I could clearly identify the problem: more than one credit card maxed out, percentage of credit utilization to credit extended was too high (65%). 
 So what about credit counseling?  I began to research the idea, speaking with a representative. He asked me about my income and debts, cash savings and other assets. 
"At this point, you are able to make your minimum payments. We generally recommend our services to those who are in default and/or facing bankruptcy or foreclosure. With credit counseling, we work with your creditors to reduce the amount you owe. For someone with reasonable credit like yourself, it would hurt you more than it would help."
"So I'm better off doing what I'm doing, just slowly paying it down?"
"Exactly." I appreciated his honesty. Debt-freedom guru and founder of Financial Peace University Dave Ramsey has spoken candidly on the issue of credit counseling, stating that " you will get out of debt, but only with your credit trashed". Debt management is thriving in the land of "having it all" (also known as the United States). What many consumers don't realize is that if, after using one of these companies, they apply for an FHA, VA or conventional mortgage, they will be viewed as if they filed for Chapter 13 bankruptcy. In her article "5 Ways to Get Out of Debt" for MSN Money, Gerri Detweiler advocates the "DIY Debt Reduction" first. One variation of this is the "snowball method": making the minimum payments on all but the smallest debt (to which is applied any and all extra money). While certainly not glamorous, I had found the correct path: hard work, doing without and small but consistent progress. There was no "quick fix", would depend on discipline and perseverance.