Self-Help for Personal Debt Consolidation

Personal debt consolidation is one of the best options that Americans have for getting themselves out of knee-deep debt. There are several steps that you can take without having to enlist the services of a debt consolidation firm or debt settlement company.

The first step is to develop a budget. Take a minute to do a realistic assessment of how much your income is and how much you spend on a monthly basis. Start by listing your income sources and then your “fixed” expenses. For example, these are the bills that are the same every month such as your rent or mortgage, insurances, etc. Then list all the expenses that vary such as groceries, entertainment, clothing, etc. Identify those variable expenses and rank them by priority. Visit your local library for books on budgeting and money management. This is the first step in personal debt consolidation.

The second step in personal debt consolidation is to contact your creditors. If you are having problems making ends meet, you should notify your creditors out of good character and respect. Tell them what your problems are and see if there is a plan that will make your payments more manageable. Don't wait until your debt has gone to a collection agency. Not only does this hurt your credit, but you are setting yourself up for harassment by collectors.

Your third step is to begin managing your auto loans and mortgage. These debts are secured debts because they are tied to assets - your home or your car. If you do not make payments on these loans they can be repossessed or foreclosed on. If you see that you are going to have your car repossessed, your best option is to sell the vehicle and use the funds to pay off the loan. If you fall behind on your mortgage, you should notify your lender immediately. If you have a history of regular and consistent payments, they may be willing to reduce or suspend your payments for a short time period. Other lenders may change your loan mortgage agreement to extend the repayment period and reduce your monthly payments. These are two important debts that must be taken care of during personal debt consolidation to avoid you losing your home.

The most important factor in personal debt consolidation, especially taking of your debt on your own, is to educate yourself. You need to know what could happen if you are unable to pay on your car, house, credit cards, etc. You then need to prepare for the worst and hope for the best. In some situations, you may be able to pull yourself out of debt or you may need to check with your lender on taking out a personal debt consolidation loan.