9. If Step 8 is relatively large, then you have a spending problem. You need to learn how to budget better so that you can pay off your debt. There are many budgeting systems and software programs that can help you with this problem. It's time to find one that works for you. You could use debt consolidation now, but without a good budget plan, you are likely to end up in trouble again. Some people in your situation use debt consolidation to get even more debt! You don't want to dig yourself in any deeper! So put off debt consolidation until you have a workable budget.
10. If Step 8 is negative or very small, you don't have enough money to live on with your debt. Debt consolidation may help, but you still need a finely tuned budget until you eliminate all of your unnecessary debt. Debt consolidation, for you, would work best with the help of a certified credit counselor.
11. How can you take measures to manage your unnecessary debt? Take a good look at your "Manage" list. First of all, are there subscriptions that you could cut back on or eliminate? Do you need your gym membership? Can you cancel a cell phone? Are you paying someone to cut your grass? Maybe you could cut your lawn yourself.
12. Next, look at your debts. Do you have a bunch of little loans or small credit card balances? If so, then develop a plan to pay these off as quickly as possible while paying the minimum on the others. You probably can't do anything about a $6000 balance, but a $300 balance could be eliminated with a bit of effort.
13. Then, cancel all but your largest credit card. When you cancel a card, you don't have to pay it back right then, they just stop accepting new charges. Now if you have to charge something, only one card balance will be growing.
14. Now that you have worked on trimming things down, how do things look? Is there very little improvement? Are you feeling like you can breathe again? If, in the end, you are left with more than three debts that have large balances, consider a debt consolidation loan. This will reduce your payments to the minimum possible and maximize what can go toward the rest of your budget. Use a mortgage calculator to figure out what interest rate and terms you need and what is available to you.
15. Now, go through Steps 1-8 again. Has the picture changed significantly? If so, and you are now living comfortably, good. Stay this course. If not, or you are feeling like you are barely making it, talk to a certified credit counselor. You need more help than an article or a debt consolidation loan can give you. Debt consolidation is not a magic wand that will make all your debts go away.
Debt consolidation is just one tool to use along with other strategies to manage your personal finances, not just your debt. Debt consolidation can reduce your stress, or make the situation worse depending on how you use it. Use it to help you create a budget that you can live with.