Ever thought about consolidating your debt using a home equity loan?

There are many people will advise you to do that when you have a pile of debt that you're trying to get paid down or paid off. But I believe that using a home equity loan to consolidate your debt is not a wise move, and I'll cover why I believe that later in the article.

First, I'll give you the lowdown on why some "financial experts" recommend using a home equity loan to consolidate in the first place.

There are a couple of popular reasons they advise this:

To Get a Lower Interest Rate - The thinking is to use a low interest home equity loan to pay off higher interest consumer debt, which saves you money on interest over time.

- The thinking is to use a low interest home equity loan to pay off higher interest consumer debt, which saves you money on interest over time. It's "Easier" Than Paying Multiple Bills- You use the money from a home equity loan or line of credit to pay off all of your outstanding consumer debt. Then you end up having only one loan payment (the home equity loan) to pay every month. This is generally easier and less confusing than paying on multiple loans every month.

Are Those Good Reasons to Use a Home Equity Loan?

On the surface, those sound like pretty good reasons. Any time you can lower stress and confusion while lowering your interest rate at the same time, that's a good thing, right?

Absolutely.

However, if you're considering rolling your consumer debt into a home equity loan, it's a good idea to figure out why you believe that you need to do it in the first place. It's time to ask yourself a couple of pertinent questions:

Have I thought about the potential future consequences of taking out a home equity loan to consolidate my debt?

Am I doing this to lower my payments because my debt is killing me financially?

Here's how I would answer these questions:

If you have gotten yourself into a ton of debt, a home equity loan is not going to cure the situation. All it does is move your debt from one place to another. It's not the debt that's the actual problem, it's the actions of the person (or people) that took out the debt in the first place.

Behavior Change is Key

Your attitudes and behaviors when it comes to taking out debt have to change. Paying off credit cards and other consumer debt using a home equity loan doesn't change the behavior that caused you to get into debt in the first place.

The result is this: you pay off all those accounts using the home equity money and you feel like you've accomplished something. Then you continue on using credit cards and such, digging the hole even deeper. This is what most people tend to do.

There has to be behavior change involved in the process. Otherwise, it's very easy to end up with a much deeper level of debt than you had intended.

I know, I get it. You're not most people. Except you are.

It's also very important to realize that there is potentially a very bad consequence to paying off consumer debt with a home equity loan. When you go this route, you are putting your house in jeopardy if you can't pay off the loan.

medical debt, credit card debt, and some consumer loans can be reduced or written off by the company if circumstances demand that you can't pay it. That could hurt your credit score for awhile (big deal, you don't need a credit score anyway), but it's infinitely better than having your house foreclosed on.

Putting Your Home at Risk

Credit cards and medical debt are unsecured debt, which means the creditor is not allowed to take any of your property if you're unable to pay. Even with a vehicle loan, all they can do is repossess the vehicle. Is it really wise to put your home at risk if you run into financial problems and can't pay?

Don't put yourself in that difficult position. Don't end up broke and homeless.

So if you're considering signing up for a home equity loan to pay off your consumer debt, let me be perfectly clear if I haven't already-

DON'T DO IT!!! There is a much better way.

Learn to start changing your habits when it comes to credit cards and consumer debt. Make a written plan to pay off your debt that doesn't involve the potential loss of your house.

Quick fixes don't usually work. Behavior change is the best fix that works permanently, without putting you at great risk.

So start changing habits now by learning how to live life without using consumer debt.

Get intense and intentional about paying off debt. Make a plan, change your mindset, live on less than you make, and prosper!

Dr. Jason Cabler

Dr. Jason Cabler is a Christian personal finance blogger, author, and speaker from Tennessee. He teaches how to get out of debt and live a debt free lifestyle through his Celebrating Financial Freedom blog and self study course. His new book "How to Budget- The Quick and Easy Guide to Making a Budget That Works" is now available. Chat with Dr. Cabler on Twitter, Facebook, and Google +.