Tips on debt consolidation
Just because you have debt, it does not mean that you should stop having a life

People get into debt for a variety of reasons and some of them are actually beyond our control.  I know many friends of mine who were laid off and had to rely on debt to pay bills and feed their families.  Once we start to borrow heavily, one thing we all do is to borrow from several sources: credit cards, home equity, banks, etc.  Let me share with you how you can simplify your life through debt consolidation.

• The concept of good and bad debt.  Mortgages and student loans are actually good debts even if you are Bill Gates.  The interest you pay on these loans are typically tax-deductible.  Credit card debt is the worst form of debt because the credit card companies base their business model on screwing those cardholders who don't have control on their spending.  (Related:  How to avoid foreclosure)
• Consolidation alone will not completely simplify your life.  You will need to make fundamental changes in your lifestyle:  Spend less than you earn.  (Related:  How to deal with rising prices?)
• Debt consolidation does not mean that you will not owe any of the debt.  It is just that you will make a monthly payment to one financial institution and chances are that this will be much lower than your multiple payments.  (Related article:  How to get out of debt?)

How to find the right financial institution to consolidate your debt?

• Since wealthy people rarely get into such troubles (unless you are Donald Trump), most people who need to consolidate their debts are those that just happen to get caught in a series of unfortunate circumstances.  And you know what that means in America.  There are financial institutions that literally prey on such individuals.  So be very careful, do your research, move slowly, and seek advice of friends and family along the way.  (Related: Online shopping safety)
• There are many so-called not-for-profit organizations that promise to get you out of debt at no cost to you.  Most of these organizations are essentially fronts for those loan sharks that are out there to screw you.  So be careful before you pick up on the phone and talk to one of those loan consolidation experts.  (Related article:  How to get relief from debt?)
• Be careful when you sign (or even agree to anything over the phone).  If you don't know what it means, ask a friend or family member to help you.  In many cases, these institutions will get your whole paycheck and then send you another check which will be much smaller than you ever expected.  (Related:  Personal finance for empty nesters)
• Stick with the well-known institutions even if the deal does not appear to be so attractive (when someone promises the moon and the stars to you, there is probably a catch).  Some of these companies are LendingTree, CareOneCredit, Ameriquest Mortgage, etc.
• Finally, use debt consolidation as the first step towards a better lifestyle.  Change your spending habits and make a commitment to get your financial situation in good shape.

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