Debt Consolidation? Loan? What to do?

Many times, it seems the only way out of credit card debt is to consolidate by applying for a loan or seeking the services of a debt consolidation company. But, in order to be able to truly tell whether or not debt consolidation is a smart financial move, you must give a considerable amount of thought and consideration to any and all means that may be available to pay off your current debt.

With the state of today's economy, it might not be the best of ideas to consolidate your debt by getting a second mortgage or securing a new loan of any kind. In fact – depending, of course, on the condition of your credit – you may not be able to even get additional financing. That being said, you may wish to seek a reputable debt management organization with certified counselors that can help you to pay your debts.

You must, however, be very careful if you decide to travel this road. In recent years there have been a slew of credit counseling organizations that have duped the public by taking their money and not paying the credit companies as they were contracted to. And, given the proliferation debt consolidation companies and the industry in general, it's a safe bet that there are still plenty of 'bad eggs' out there.

So, what's a body to do? Well, given the two options proposed, ask yourself this question: "Does it seem as if either choice would solve my debt problem, or would one (or both) probably just add more stress to my life?" If you come to the conclusion that you'd just as soon do without both of them, there are ways in which you can pay down your debt without having to resort to a new loan or debt consolidation. Here are some ideas that can help you reach your goal:

• First and foremost, you must resolve in your own mind that there is a problem, and that you can do something about it. Without coming to grips with these two fundamental ideas, you'll be hard-pressed to get anything done on your own.
• If your debt is mainly limited to credit cards, call each company and ask them to lower your interest rate. If you have a good payment history with them, they may very well oblige you.
• Use a debt-repayment strategy to help you pay more than the minimum monthly amount due on your debts.
• It may be necessary to find a second job to help pay down your debt. You might also consider a part-time work-at-home business, or selling some items you no longer need on eBay.
• Develop a budget. Plan not to buy any high-priced items for at least six- to twelve months; instead, put the money toward your debt.
• Do not buy anything with a credit card; use cash only. In this way you'll be much less tempted to buy something that you really can't afford.
• Last (and probably least), if you absolutely have to, ask for help from a family member or friend that can loan you money to pay off your debt. The amount that you save in interest alone will help you to pay them back sooner rather than later. But, please, make paying them back a high priority – and then do it. It's not worth ruining relationships over. If they think enough of you to loan you the money you need, be sure to return the sentiment by paying them back as promptly as you're able.