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Debt consolidation should be considered the last resort option, with the worst case scenario being filing for bankruptcy. The process involves accumulating all debts into one single debt, usually with a very low interest rate and longer repayment terms. In many cases, debt consolidation involves the services of a debt consolidation company. The problem is that some of these businesses are run by crooks. But the good news is that you can consolidate your debt on your own without resorting to the services of large firms.

Debt consolidation is best for credit card debts because they usually come with very high interest rates. Although it may also work for unsecured debts with lower interest rates, you might want to use a debt consolidation calculator to check if the debt consolidation will work for the accumulated debts.

Managing Debt
First of all, do-it-yourself debt consolidation entails wise financial management. Although it may not be a practice of many, sticking to a planned budget is essential when managing debt. If you plan to consolidate your debts, it is wise to list all debts according to their priority. Debts with the highest interest rates should definitely be on the priority list. Debts that are nearly due should be also listed there. The reason that such financial obligations should be considered a priority is that they incur more debt when unpaid for a longer period of time. After paying these obligations in full, proceed with the other debts.

Obtaining a Secured Loan

The best way to consolidate debt is to obtain a secured loan. A secured debt is one that requires collateral as security for the loan. The collateral may be your home, your car, or any piece of jewelry and valuable asset. Since the debt is secured, the creditor usually offers very low interest rates. This is because the loan is considered low risk.

After obtaining the secured loan, contact your priority list creditors and pay them off in full. Move down the priority list and continue with the other creditors.

Sticking to Your Budget

When all creditors are paid off, the only debt left would be consolidated debt in the form of a secured loan. This does not end the process yet. Remember that the loan will turn into another difficult ordeal if not managed properly. Nonetheless, a secured loan will now be easier to pay because it comes with lower interest rates.

To pay for this debt, make a list of all sources of income and determine how much you are willing and able to pay the creditor each month. It is essential to stick to the budget because it will ensure that you pay your debts as soon as possible.

Self-help Books

There are multiple ways to consolidate debt, and they are listed in many self-help books. Obtain a copy of a good self-help book to find which method works best in your case. These books will outline the many different strategies on how to tackle debt burdens.