Before we get started, let's touch on some of the benefits you may discover from consolidating your debt... a better feeling of control of your world and situation... being able to afford some of the things you have been putting off... enjoying a Friday night out with a loved one... getting that small gift you promised your child... being able to get a fit and not just a card for your loved ones' birthday... and on a more serious side, to eliminate the phone calls and stress from bill collectors and avoid going bankrupt and losing everything you have.

One important fact for you to keep in mind, is that it is often the small bills that build up to a larger debt and by consolidating your smaller bills you can keep your personal affairs in order. Did you know that most people that have gone bankrupt and lost most of their assets can be traced back to not having made the extra $250 per month that they needed to manage the repayment of their debts. Just think about this, the lack of cash flow of $250 per month causing the loss of a lifetime of work and savings, your house and car. And that does not even consider the personal cost from the stress and strain that people suffer from going bankrupt, often costing them their marriage and in some cases the loss of visiting rights to their children.

All of this could have been avoided, if they had only used the secret of debt consolidation and made it part of their mindset. To make sure you keep the secret of debt consolidation in your mind, just remember that the longer that you owe money on your debt the more money you will have to earn to pay off that debt, as money is not only is worth less today compared to the past but your debts increase and compound as a result of interest, late fees and penalties, So let's look at an example of how you can apply the secret today.

If you have two or more credit cards, look at the interest rate that you are being charged by the credit card company on each of them. Does one have an interest rate that is 2% or less than the other(s)? With a simple phone call you may be able to combine the balances on both or all cards by transferring the balance from the higher interest rate credit card(s) to the lower interest rate card. Remember, to also check and factor in the other charges that you are being charged by the credit card issuing companies, as the extra charges are often overlooked and any addition to your debts should not be overlooked.

A word of caution, do not go out and use the credit cards again and run up new debt. You should cancel your extra credit cards to avoid the temptation to use the higher interest rate credit cards again and find yourself running up new high rate debt.

A second and more involved method to consolidate your debts is available by obtaining a loan on your home or refinancing your mortgage. Have you lived in your house for a long period of time? Do you have a large equity investment in your home? You can refinance your current mortage at a lower rate and use part of your equity in your home to pay off your higher interest rate debt from credit cards, medical or hospital bills, personal loans, and or other lines of credit. Just think how much more money you would have in your pocket if you did not have to continue to pay high interest rate debt every month.

Clearly, while consolidating your debts using your home is an option, you must still look to your entire financial situation and follow a monthly and yearly budget and debt repayment plan that is within your ability to service, as you do not want to risk the loss of your home through the mismanagement of your repayment of your home loan.

The principle of debt consolidation is simply to make what you have go further and to save money on the repayment of your debts. This is most often done by changing the terms on your current debts by combining debt, reducing the interest rate on your debt, reducing and or extending the time you have to pay off your debts, to minimize the total amount that you have to pay will putting you in a position to repay your debts in an orderly manner.

a) Your monthly payments will be less on a 10 year loan versus a 5 year loan, assuming the same interest rate, i.e. 10% interest on a loan amount of $100,000 will result in a monthly loan payment of $1,310.59 versus $2,107.14 for 5 year loan, thus reducing your monthly payment by $796.56. However, while your monthly payments are lower by $796.56 your total payments over the entire term of the loan is greater by $30,841.60 for a 10 year loan ($157,270.30) versus a 5 year loan ($126,428.70). So you really need to seriously look at balancing what you can afford to pay monthly against extending the term of your loan as there is a long term cost to extending the term of loans. When you are being charged interest, it is always better to pay off your debts on the shortest term possible that is within your financial means.

b) Your monthly payments are less when the interest rate charged is lower, say 7% versus 10%, which will save you money in the form of interest costs over the term of the loan irrespective of the term of the loan, i.e. 7% interest on a 10 year loan in the amount of $100,000 will result in a monthly loan payment of $1,154.35 versus $1,310.59 on a 10% 10 year loan, thus reducing your monthly payment by $156.23. Further, you will have saved $18,748.17 in interest charges over the 10 year term of the loan.

Another advantage to consolidating your debts is that you will be making one payment to one lender instead of making multiple smaller payments to many different creditors. This will mean you will have less to manage which will in turn reduce your overall stress in dealing with your personal financial affairs.

It really does come down to making minor adjustments to your daily life and personal finances such as knowing exactly what you owe and then controlling your credit card debt, working out a personal debt management plan, taking advantage of lower interest rates financing, refinancing your consumer debt. As you start and move forward through these items you will get on the right track and gaining control of your life and personal finances. It is within your power and control to work your debts out to your advantage and not to put yourself at risk to lose of all that you have worked for over the years.

Let's face it, no one likes to be behind in their payments or receive overdue notices or phone calls from their creditors. It certainly does not do anything to brighten your day. So it comes down to a choice... will you chose a happier and quieter life or one burdened with debt and pressure?

Make the choice that will empower you and live a happier and healthier life.