No, consolidation does not reduce the amount of money you owe. Only paying down principal can reduce how much you owe. Consolidation simplifies bill paying and might save you money on interest. It might also lower the amount you pay each month. A cash out refinance adds debt to your mortgage. Because mortgage payments can be spread over 30 years, your total monthly debt payments may be lower. However, refinancing may increase the total amount of interest you pay over the life of your loan. Financial professionals note a risk of debt consolidation is it can give you access to new credit, which gives you the ability to borrow more money and increase the amount you owe. Use consolidation as part of a responsible plan to manage your finances.