consolidate debt

Borrowing money on credit has become a pretty standard way of living in the United States over the last several generations. When the cost of living is compared to the average American household income, not many of us really want to tackle the prospect of living within our financial means, especially when easy credit beckons from every corner.

Tougher financial times in recent years, however, have led many people to consider ways to minimize debt, especially when paying all the bills adds up to a substantial amount of time. Paying them all each month can seem harsh enough but missing a payment can be disastrous, given all the fees, penalties, and added interest that are generated by missed, late, and forgotten payments.

When facing an ever-expanding stack of individual bills that need to be paid, it’s almost impossible not to wonder how to consolidate debt so that paying everyone back is quicker and less stress provoking.

The first step in determining how to consolidate debt is to realistically analyze the debt already accumulated. If you’re a pen-and-paper sort of person, grab a legal pad, a pen, and a calculator. If computers are more your style, set up a spreadsheet. Either way, expect to spend a couple of hours to laying the groundwork for the mission.

Gather up all the notes, bills, and monthly statements that you will consider when you determine how to consolidate debt for your household. Every household is different but you’ll want to be as thorough as possible. This is no time to play games about the reality of the situation. That’s how you got here in the first place.

The next step to how to consolidate debt is to itemize each and every single debt owed – credit cards, student loans, bank loans, mortgage, car loans, furniture, clothing, etc. Leave nothing out. List the name of the company to whom you write a check each month. Include the amount you pay each month as well as the entire balance due. Also include the interest rate paid.

Perhaps the hardest part of how to consolidate debt is to tally up the all-inclusive debt once the details are itemized. Take a deep breath and move forward through it all. Cry a little if you must. Whatever you do, don’t abandon the mission at this or any other point. You can do it.

Once you know what types of debt you owe (revolving credit, mortgage, student loans, etc.), how to consolidate debt effectively means grouping similar types of debt together in as few groups as possible. For example, student loans can be consolidated as one loan payment instead of several but they cannot be consolidated with car payments and credit cards.

Once the groundwork is laid, the true scope of the problem revealed, you need to research avenues of debt consolidation. Perhaps a family member will loan enough money to help you through this. This option can be risky family business if all doesn’t go according to plan so make sure there is a plan that includes repayment schedule, interest, and all other pertinent details. Do not enter into a financial situation with a family member unless you are absolutely certain you can fulfill each and every single clause of the loan agreement to the letter and on time.

Perhaps a better option for most people when it comes to how to consolidate debt is to work with a lending or counseling institution that specializes in such. There are specially chartered organizations that focus solely on consolidating student loans while others focus on consumer credit such as credit cards and other forms of revolving credit.

Perhaps the most vital consideration when evaluating how to consolidate debt is to work only with trusted, reputable lenders who have a long history of working with this type of debt. One excellent source of help is American Consumer Credit Counseling (ACCC), a non-profit organization chartered to help American consumers through exactly the issues you are facing now. They offer guidance, advice, and can often renegotiate some of your credit contracts to secure lower rates or an extended payback period.

How to consolidate debt effectively means diligence, discipline, and determination. Don’t be persuaded by the many services energetically marketed lately. The people behind these types of lenders are aware of the vulnerability of a person experiencing financial disaster and they can make getting out of debt seem easy and painless. It isn’t.

Stick with only the tried and true when it comes to working with any company that claims to know how to consolidate debt and ease your money woes. Caution is advised but good, honest help is available.