What self-help options are there for debt consolidation?

Options for self-help debt consolidation

For some consumers, getting out of debt will be something they can do on their own. This option might be best for individuals who are deep in debt due to temporary unemployment or an unexpected, and large, one-time expense. As long as they don’t continue to add to their overall debt, these consumers can often manage the repayment of debt on their own.

The first step in managing debt is to understand how much money comes in – as income in whatever form – and how much goes out, as expenses like rent, insurance premiums, eating out, and buying things like clothes or books.

Some expenses, like paying utility bills, are necessary, and others, such as going to the movies every Friday night, are not necessary. A budget is a simply matter of prioritizing those expenses, cutting down the unnecessary expenses, and using the money saved to pay down the debts. It is simple to explain a budget process, but not simple to execute for most consumers.

Once an individual creates a reasonable budget, and knows how much of the budget can go to repaying the debt, there are a couple of options – working with creditors to set up repayment programs or consolidating debt through a loan or line of credit.

If much of the debt is high interest, non-secured debt like that owed to credit card companies, consolidating debt through a home equity loan may be a good idea – it can reduce interest and provide tax benefits.