If you are struggling with debt and want to take action to improve your financial circumstances, debt consolidation could be the answer you are looking for. If you are making monthly payments on multiple credit cards and other loans, a lot of your income is disappearing just to service debt. In other words, your money isn’t benefiting you at all. By combining all your debts into one loan with a substantially lower interest rate, you can free up extra income to spend in ways that benefit you and your family.

High debt levels can create a lot of stress in our lives, particularly if we are constantly chasing the money to pay them. It is easy to fall into the cycle of taking money from one credit card to pay another, hoping against hope that things will get better. Unfortunately, if you are juggling high credit card payments and consumer lines of credit every month, you can find yourself falling into increasing debt with only bankruptcy in sight unless you can stop the free fall with debt consolidation.

If you use a lower interest, debt consolidation loan to pay out all other debts, you can immediately lower your monthly expenses and have more money in your pocket. You will also have the added benefit of making one monthly payment instead of many. You will more easily be able to cover your living expenses and may also be able to save, invest or even pay off your new loan more quickly if you so desire. More money every month will give you more control over your life and reduce the amount of stress you are dealing with.

There are a number of different debt consolidation loans to choose from. If you are a homeowner with adequate equity in your home, probably the best choice is a home equity loan, which offers a lower interest rate than other types of loan. However, there is a risk attached to this loan. It uses your home as collateral so if you miss a payment, you risk losing your home. Since your overall monthly expenses are reduced, this is probably a low risk, but it still needs to be considered.

The most popular choice of debt consolidation loan is an unsecured personal loan. These loans do not require collateral so there is no risk to your assets. They also tend to have lower interest rates than credit cards and consumer lines of credit, saving you a lot of money over the term of the loan. They have fixed terms, unlike credit cards and lines of credit, so you know that eventually you will be debt free. Consumer lines of credit and credit cards can remain with high balances and may possibly never be paid off, if you just make the minimum payments and keep using them.

However, under some circumstances low rate credit cards or home equity lines of credit can also be used as debt consolidation loans. This would mainly apply to upcoming and unavoidable additional expenses such as medical bills or college education that will require partial or ongoing payments. By consolidating debt, you have created the option for further borrowing to cover these expected expenses without increasing your monthly expenses. However, this very flexibility can be dangerous to your financial future. This option does not guarantee that you will actually get out of debt in the long run.

Keeping up with multiple debt payments is very stressful and can affect your health, your ability to perform at work, your relationships and your family. Many divorces are the direct result of the stressful impact of debt. If you want to get your finances back on track and save yourself and your family from any more stress, the answer could well be debt consolidation.