Self Help Debt Consolidation

Self help debt consolidation is right for you, if your debt level is simply not enough to justify going to debt consolidation firm. This is also true if your debt occurred through an emergency such as medical expenses. While a debt consolidation service would ensure all of your debts got paid off, it's sometimes possible to do this faster by yourself.

For many people, consolidating their debts seems like an obvious choice. You get one loan, and then you only have to pay one loan off each month rather than many creditors. It eliminates or reduces many creditor calls and letters, which can greatly lower your stress.

However, self debt consolidation is not for everyone. Not everyone needs to consolidate their debts, and not everyone should consolidate, either by borrowing money to pay off the debts, or by using a debt consolidation service. The comparison below illustrates the situation whether or not to do a self help debt consolidation.

The Right Time for a Self Help Debt Consolidation

For some people, whether or not they consolidate their debt may depend on whether or not they qualify for a second mortgage. But watch the loan's interest rate, as it may be higher than the interest you pay on current bills. If it's higher than what you're paying on most of your loans, you may end up paying more than you would if you continued paying all of your creditors separately.

You may use an online calculator to determine how long it will take you to pay off your debt as it is now, and how long it will take if you consolidate. Balance this information against your own personal factors, such as your credit score, whether you will be looking at selling your house in the near future, and your own level of comfort with debt.

Also, keep in mind that many people consolidate with a bank loan or second mortgage, and then end up charging again because they cannot meet expenses.

If your debt occurs because your income does not cover your bills, consolidation will not help, as it will not increase your income or decrease your bills. Also, if you use your house as collateral for the loan and then default on the loan, you could lose your home.

So, don't start consolidating your debt until you have found the underlying causes of your debt and realized all of your options. Consolidating debt can actually end up being disadvantageous for some families. But you can take a self help debt consolidation route if you're sure you can manage your own debt problem.