by Tom Geoffroy

Created on: July 11, 2010

It is reported 10 to 16 million people are suffering due to debt. Personal health suffers, relationships suffer, society suffers and the world economy suffers. It is time to stop the downward spiral, consolidate, and dig out from under the bondage of debt. Here are some of the best ways to consolidate debt.

♦ Admit debt is a problem in your life.

Problems cannot be solved until they are recognized as problems. Avoidance and sweeping things under the rug will not solve anything. Ignoring problems only causes them to get worse. There comes a time when we all must face the reality of our troubles so we can begin the process of overcoming them.

♦ Compile a list of all your debts.

When consolidating debt make a list of all your creditors. Bring together all credit card accounts, car loans, personal loans, college loans, first and second mortgages, and any other outstanding debts. Put your list together and note the amount owed and the interest rate charged. Separate the secured debt and the unsecured debt. Add it all up and take some time to think about the total amount owed. Let the reality of the number provoke you and motivate you to retire it all. Do not let this drive you into depression. You are on your way to freedom. Keep reminding yourself of that.

♦ Start with unsecured debt first.

Unsecured credit card debt is the most dangerous. Credit card companies allow you to make minimum payments of interest only; all the while driving up your debt. You can consolidate this ever growing mountain of debt in one of three ways. Credit card balance transfers to one card, debt consolidation loans from a bank, or a home equity loan from a mortgage company. The idea is to bring them all together into one payment at the lowest interest rate.

♦ Secured debt should be the last priority.

Home mortgages and equity lines of credit do not pose as great a risk as credit cards. It is best to focus on these after credit card debt is under control. A long term approach to debt reduction is called for here.

♦ You must change your economic lifestyle.

A sad truth is too many people, after consolidating their credit card debt, never change the way they handle their finances. The same people who try to climb out of debt wind up in worse shape than when they started. If you continue to use credit cards indiscriminately you will bury yourself again and even deeper. A bail out without a change in lifestyle is a formula for disaster.

♦ Debt free living is possible.

Debt consolidation is a start but it is not an end. Sticking to a budget and buying only what you can afford will go a long way to living not only debt free but also stress free. Let today be the beginning of a long and healthy life of freedom.

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