Americans are deep in debt once more. Total household debt which includes student loans, mortgages, car loans, credit card, and other debts has risen once more since the Great Recession.

According to the New York Fed, Americans’ debt has hit a new record high of $13 trillion in 2017.

Stats also show that people who are in their peak earning years which is between ages 45 to 54 also has the highest levels of debt at $134,600.

This is the age where people feel established in their careers, so they are confident enough to carry more debt during this time.

The problem arises when debts are mishandled, and they spiral out of control.

One strategy that can help manage debts is debt consolidation. This is a plan to combine all your high-interest debts into a single payment.

Consolidation may cut costs by lowering the interest rate on debts and reducing monthly payments.

Debt consolidation is a debt relief tactic that seeks to untangle the mess consumers make with having multiple payments from multiple creditors.

The solution combines all your bills into a single debt which can be paid off through a debt settlement or debt management program. You get a chance to make one monthly payment for all your debts at a reduced interest rate and amount.

You have a choice of consolidating with or without the help of a loan.

This is a long-term strategy which takes you 3 to 5 years to pay off your debts.

Steps To Take

If you are sure that debt consolidation is the solution for you your first step is to assess your credit card debts.

Compile all your credit card bills and compute your total amount owed, average interest rates and total monthly payments needed to be made.

This gives you a basis for comparison for your goal of lowering your interest rate and reducing your monthly payment.

Take a look at your budget, if your monthly income is higher than the expenses you may not need to consolidate debt.

If you don’t have a budget, you can call a nonprofit credit counselling agency, and they will coach you on how to make one for free.

The three major choices for consolidation are a debt settlement, debt management or a loan. There are advantages and disadvantages to each option so know what they are before you jump in.

If you have a debt that is over $5,000, a debt management or debt consolidation loan are good options for you.

Both plans are founded on lowering the interest rate paid, but there is no loan involved in a debt management plan.

If your credit card balance has hit a figure that is unmanageable and you can’t afford your minimum monthly payments, a debt settlement is a good option.

If your credit card debt is under $5,000, a balance transfer is another option. If you have a high credit rating, you can apply for a credit card balance transfer. These cards give you an introductory period of 12 to 18 months of 0% interest before regular interest rates apply. Take note that cards charge a 3% to 5% balance transfer fee.

Another do it yourself way you can consolidate your credit card debt is by not using all your cards and use cash for paying all bills. This allows you to set aside a part of your income to pay down your balance for each card one by one.

Any of the three choices will take you 3 to 5 years to eliminate your debt. It is vital that you undergo a behavioural change where your goal is to pay off debt rather than accumulating more of it.

You can’t be reckless with your credit cards while paying off your loans. A debt management program can reduce your interest rates but if you fall behind on monthly payments the creditors who gave you the major concessions may revoke them, and you are in a worse situation than before.


If you choose a debt consolidation loan with your house or car as collateral, failure to make payments could mean losing your home or vehicle which is an added burden to you.

If you choose debt settlement, you can reduce your debt by as much as 50% but your credit score will suffer, and it will last for seven years. This will make it hard for you to get a loan for a house or a car during that period.

About Michael:

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