nterest rate. Then you'd use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt

Many people suffering from deep debt obligations often look towards debt consolidation as the answer to their problems. Sometimes the debt is so painful, they don't always look at both the pros and cons of this debt solution though, so we'll take a brief look here.

First though, what is debt consolidation? Simply put, it's the process of combining all your debts into one. If you have ten debts of $10,000 each, then you have a total debt of $100,000. Some of those debts however, might be generating an additional 10% interest, while others are generating 15%-20% interest. In other words: Some of your debt is more expensive than others.

This is where debt consolidation comes into play. In theory, you'd take out a loan for $100,000 at a reasonable - or hopefully low - interest rate. Then you'd use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt

en debts of $10,000 each, then you have a total debt of $100,000. Some of those debts however, might be generating an additional 10% interest, while others are generating 15%-20% interest. In other words: Some of your debt is more expensive than others.

This is where debt consolidation comes into play. In theory, you'd take out a loan for $100,000 at a reasonable - or hopefully low - interest rate. Then you'd use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt

words: Some of your debt is more expensive than others.

This is where debt consolidation comes into play. In theory, you'd take out a loan for $100,000 at a reasonable - or hopefully low - interest rate. Then you'd use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt

nterest rate. Then you'd use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt can be done with debt consolidation loans, by transferring your debt to zero or low interest credit cards, and by taking out a home equity loan.

Using the equity of your home to pay off debts can be risky, because if you default on the new loan, you could lose your home.

Likewise, using zero interest credit cards could also be problematic in the future, because these offers are usually designed to lure you in. The zero interest doesn't last.

Debt consolidation loans might be helpful, but be aware that when you have debt problems to begin with, you might not qualify for low enough interest rates. So if you choose to go this route, be sure to do all the math: Figure out whether the consolidation loan actually will reduce your overall payments - including the to