Firstly, start to get into the habit of paying for things in cash. Stop using those cards. Leave them in a draw at home when you go out – just don’t keep them with you. Remember this: if you haven’t got the cash to buy what you want, THEN DON’T BUY IT.

You need to drastically make lifestyle changes to cut down on the amount of spending that you do. Quit going to the bar so regularly – ask people round to your place, cancel your gym membership, swap utility providers – use the price comparison sites on the web, swap house and car insurance companies – again use the web, if needs be sell your car and pay off the outstanding loan – then buy a cheaper car.

Get a recent bank statement and make a list of all of your monthly outgoings.

Look at each one carefully and decide if you a) really need whatever it is you are paying for and b) if you need it, then how can you get the same thing much cheaper. There is so much choice and competition for so many products that you can guarantee you WILL be able to get your products and services MUCH cheaper elsewhere.

Of course, the money that you save from the lifestyle changes that you make will go towards paying off those debts. Make sure you pay off the highest interest rate debt first. Aim for a target amount to pay off each month and stick to it.

Do not pay off any less – unless you have an unexpected emergency to deal with which may take priority.

Next you need to think about generating some extra income. Get yourself a second job to earn extra cash. Put all the additional cash you have earned toward paying off your debts. Have a look around your home – there must be a few little used items you could sell to generate to cash? You could have a yard sale or put your items for sale on ebay. You will be surprised by selling a few items will generate a lot of cash – all of which you will use to pay off your debts.

There are many, many other ways of becoming debt free such as the consolidation of your outstanding debts. This is a great way to free up extra cash – but be responsible and don’t just it as an excuse to spend more and get even more into debt.

As can be seen, it’s quite straightforward to pay off your debts but it does require a change in mindset and a change in your lifestyle habits. Follow this plan and you will be debt-free, for good.

Debt consolidation does not get rid of existing debt.  Most often it is credit cards, retail credit, student debts and car loans that end up being consolidated.  People use debt consolidation to roll their smaller payments into one large payment or they extend the life off the loan to bring their payments down.  The most practical type of debt consolidation rolls existing debts into a home mortgage or he-lock loan on your house.  In a sense, you are just borrowing money from one lender to pay off another. The main purpose of debt consolidation is to lower your monthly payments.  It is important to note that even at a lower interest rate, you may still be paying more interest on the life of the loan if the loan is for a lot longer period of time.

Be ware of people who tell you that you can settle your debts for a fraction of what you owe.  If you are not already behind on payments this will often only work by ruining your credit .  If you are behind, you can probably settle a lot of this debt yourself with out paying a 3rd party their commission.  If you own assets or have an income there is nothing to stop the credit card companies for suing you after the settlement for the amount you originally owed.   Another thing to avoid is brokers trying to consolidate your debt into an adjustable rate mortgages with a balloon payment due in 1, 3, or 5 years.  Brokers can make a hefty kickback on these loans because the true payment amounts can be masked behind the arm. 

Debt consolidation is a serious step.

At best it is only a temporary fix to a bigger problem.  You should find out as much as you can about debt consolidation before proceeding. 

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Debt consolidation loans can be an unsecured loan obtained from the bank, or if you own a home or car, you can use it for collateral in most cases and obtain a secured debt consolidation loan with lower interest than an unsecured loan. This is because they use your home or car as collateral- and can take the home or car in the event that you don’t keep up with your payments.

When to Get a Consolidation Loan

A debt consolidation loan is a good idea for most individuals who are having trouble keeping up with excessive credit card debt. A debt consolidation loan will almost always offer a lower interest rate, helping to save the debtor money- but in addition, the loan will be used to pay of multiple accounts and provide the debtor with a single monthly bill instead of each individual credit card bill.

It’s important to note, however, that getting a debt consolidation loan to pay off credit card debt is only feasible for individuals who are able to demonstrate self control with their spending and avoid using credit cards in the future. (Or at the very least, avoid spending more than you can afford to pay on a regular basis). Debt consolidation loans can be dangerous for individuals without financial self control, as they will suddenly find themselves with a large debt consolidation loan payment each month in addition to the new debt they may create with credit cards.

Benefits of a Debt Consolidation Loan

As mentioned, there are many benefits to obtaining a debt consolidation loan. First, and probably most important, a debt consolidation loan allows you to pay off each of your individual credit card accounts (and possibly other unsecured debt). When you make payments on each account individually, you pay an interest rate on each individual balance and less money goes to the principal balance than the interest in most cases.

Another benefit is simply moving from having to make 2 or 4 or 6 or more payments each month, to the ability to write a single check each month to the debt consolidation loan for your debts. Makes keeping your check register easier, and helps you manage your finances a little better since you have less to keep track of.

Consolidation Considerations

Some people have argued against the use of debt consolidation loans that are secured against the debtor’s home. The reason it may not be your best method for paying down debt is because you are creating “secured debt” out of your “unsecured debt”. When you pay off credit cards using a loan secured by your home, it is true that you make your monthly payments more affordable, but you are putting your home at risk. Additionally, you are going to have a long period of time in which to pay off that debt, and theoretically, you could actually be paying more overall even with lower monthly payments, because of the extended period of time you have to repay the money.

Debt consolidation loans are often a good answer for helping individuals get their monthly budget back under control, however, it’s important to weigh each of your options carefully before applying for a consolidation loan.

Destroy Debt has the advice and resources you need on debt consolidation and other financial topics.