If you have too much debt or are suffering a major spending hangover, you can get things back on track.

Working out a plan on how to tackle your accumulated debt together in a simple way is exactly what debt consolidation is all about.

Debt consolidation can also go a long way to repairing your damaged credit rating.

Before you determine if debt consolidation is right for you, honestly work out your financial position in five easy steps.

Get a pen and paper and be honest.

  1. What is your income?
  2. How much money do you need to live?  List your living expenses such as petrol and groceries (not billed items).
  3. How much debt are you carrying?  List everything – What you owe to each bank, institution, retailer, business, or person?  This includes your bills, monthly commitments and everything you can think of.
  4. How much interest are you paying on your debt each year?
  5. What other costs are you paying to keep up your current debt regime?  By this we mean annual card fees, late payment fees (sometimes you might be doing this monthly), dishonor fees.

Do I need to consolidate my debt? 

One way to determine if you have too much debt is to work out income you have left to pay down your debt.  If you can only pay the interest and not your actual debt levels, you have too much debt.

Your hard-earned cash will simply be spent up paying for the administration of your credit lifestyle, with the nasty bank expensive costs of credit card fees, credit card interest.

You can fix this by consolidating your debt.

This essentially means bringing all your loans together into one at a lower interest rate, so you have one loan repayment to make each month.  Debt consolidation is a very good option for people who have bits and pieces of debt accumulating all over the place – for example store cards or loans, a few credit cards and other personal loans.

Some people choose to consolidate into one personal loan, or into their mortgage.  The result is that all the smaller debts are paid off, leaving you with one loan to pay back.  It also can save you thousands of dollars in interest repayments and other fees and charges to lenders.

Talk to your local bank about how they can help you.