Start with your credit cards. Credit cards are the form of debt that usually carry the highest interest rates. They are also the easiest to consolidate.
Take all of your credit cards and lay them out on the table. On a piece of paper, write down each card’s interest rate, credit limit, and amount you owe. Transfer as much high interest credit card debt onto lower interest cards. Call the banks that issue the cards (the toll-free number should be printed on the back of your card or your statement) and request that transfer fees be waived. They will likely agree to do so as a “one time” courtesy. If the person you are speaking to is unable to accommodate you, politely ask to speak to a manager with authority to waive the fee.
You should also ask them to lower your interest rate. Point out that you are a reliable customer, and wish to remain a customer, but that you would appreciate a lower rate. More often than not, they will lower your rate.
Remember that this strategy to control debt only works if you stop using the higher interest rate cards. Once the debt is consolidated on the lowest rate card, focus on paying it down every month. Take the other cards out of your wallet. Consider closing those accounts. If you continue to use the higher rate cards, you will find yourself in a much worse situation than before you consolidated.
Home equity loans are another strategy to consolidate debt. When used wisely, they can enable a person to pay off other, higher interest debts, and enjoy having just one debt payment every month. However, the collateral on a home equity loan is your home! Before signing the terms of a home equity loan, set up a budget for yourself to pay off more than required each month. If you default on a home equity loan, you could lose your house.
Credit Unions usually have lower interest rates than banks for loans. If you have access to a credit union, join and look into taking out a loan from the credit union to pay off other, high interest debts. As always, be diligent about paying off the lower interest loan. Not making payments on time will destroy your credit rating and you future financial opportunities.
Some life insurance policies allow the insured to borrow against it. The money can be used to pay off debts, and technically, the insured does not need to pay it back. If a loan against a life insurance policy is not paid back before the insured dies, then the amount owed is deducted from the payments to the beneficiaries.
Once debt is consolidated, it is imperative that the minimum is paid on time every month. Failure to do so may destroy an already shaky credit rating. Also, after consolidating debt, try to avoid taking on additional debts until the old debt is paid.