Free debt consolidation sounds really good, right? Especially, when you’re already in a financial jam, I mean who wants to put more money out to solve a money problem if they can have it solved for free. Many of the companies and organizations that advertise themselves as being free, know that people really think and feel that way, and use the word FREE to play on their desperation and need for help. Many times when you get to their website or call them, you find out that they are offering a FREE consultation, and not free debt consolidation services. Free debt consolidation service does exist, but it is truly a rare thing.

The handful of free debt consolidation companies and organizations that do offer completely free services to their clients are subsidized by the credit card companies themselves. If you didn’t catch that, the credit card companies pay for the services rendered to the client, but don’t worry they can afford it. This type of debt consolidation has nothing to do with taking out a new loan to consolidate your overall debt. Rather this approach to debt consolidation has more to do with debt management and debt settlement.

Off hand, I don’t know of any financial institution that will make you a consolidation loan for free. In other words, if they make you a loan, they expect to be paid back with interest. If you are looking for a free debt consolidation loan, you may have to borrow from someone in your family or a close friend. Friends and family usually don’t charge interest on loans, but there is a whole different set of risks involved.

Most debt consolidation companies and organizations actually charge for their services. A good majority of them do offer a free consultation, but that’s about as far as it goes and that’s mainly to talk you into using their service. They usually charge a set up fee and a monthly maintenance fee to handle your account. For more information on what they do, follow these links: credit card debt consolidation service or debt consolidation non profit.

Unfortunately, there are some bad eggs out there, especially online; they offer you FREE services to entice you so they can scam you. So, if you are looking for free debt consolidation, make sure that whom ever you are dealing with truly is offering their services for free, and that they are a legitimate debt consolidation company or organization. Please keep that in mind.

Consumer debt consolidation is the practice of taking out a loan, either a secured or unsecured loan, to pay down or payoff another loan or loans. This is a common practice in regards to consolidating credit card debt. Because many credit card accounts carry higher interest rates then normal bank loans, many individuals are motivated to take out a secured loan at a better interest rate and payoff the balance on their credit card accounts. This is beneficial to the consumer because they end up paying less money in interest over the life of the loan, compared to the amount of interest they would have paid, paying off their credit card accounts.

Also, it’s much easier to keep track of one payment compared to several payments, and usually, the consolidation loan payment is lower than the combined total of the previous credit card account payments. That fact in itself is the main reason why people choose to consolidate their debt. Debt consolidation is helpful in making consumer debt more manageable. Lets say you have six credit cards and the combined monthly payment for those cards is $251.00. You take out a consolidation loan for the balance on those accounts, and you end up with one payment of $100.00. Wouldn’t that help give you a little financial breathing room? Yes, of course. Well, that’s the beauty of consumer debt consolidation. Again, it has the ability to make your overall debt situation more manageable. In other words, it makes it easier to deal with.

But, lets be real; it does not take the debt away. You still owe on borrowed money whether it’s a consolidation loan or credit card loan. And just because I mentioned it, you do know that using a credit card is the same as borrowing money from someone, right? I get the impression – myself included – that most people don’t make that connection. I think that’s due to some incredible marketing and advertising on behalf of the credit card companies themselves.

Consumer debt consolidation can be a very beneficial option for managing debt, just keep in mind that it does not remove the debt.

Lately, you’ve started to notice a peculiar thing; each month that goes by it seems that money is getting tighter and tighter. You also notice that more money seems to be going toward credit card debt payments. STOP! LOOK! and LISTEN! If you didn’t catch that, it was a warning sign; a financial warning sign, a sign that you may be carrying to much debt.

The less expendable income you have the more you will be tempted to use credit to get through the month. The more you borrow from your credit cards to get through the month, the larger your credit card payment will be next month and the less expendable income you’ll have. As you can see, and you may very well be experiencing first hand, it starts to become a vicious cycle. The less you have the more you use, leaving you with even less. That’s how debt works - in particular credit card debt.

At this point, it’s still feasible to use debt consolidation as a solution to your debt problem. Debt consolidation is a major plus in a situation like this, because it gives you the ability to payoff several credit card accounts, which looks really good on your credit profile, plus your overall debt repayment becomes manageable. You end up with just one payment, hopefully at a decent interest rate, and your back to having some breathing room as far as expendable income goes.

The thing to do at this point is to establish a spending plan or budget and stick to it. Put as much additional income as you can towards paying off the debt, but don’t short yourself, so you wont be tempted to use credit to make up the difference. If you begin to use your credit cards again, you are defeating the purpose of consolidating your debt, and could end up in a much worse place than you were.

Consolidate your debt, create a livable financial spending plan, stick to it and don’t incur any more debt, that’s how you do debt consolidation the right way.

I was speaking to a friend the other day, and he told me the story of an older man that did not speak very good English. The man used the term debt getof several times in the conversation, but my friend wasn’t exactly sure what the man was referring too. It turns out after some effort of trying to decipher the older gentlemen’s meaning debt getof, - means get out of debt. Or at least that’s what he was trying to say. The man was referring to his son in collage that had run up an incredible amount of credit card debt.

The man’s son had received several credit card offers while going to school out of the area, and had begun to use them to make up for any shortages in his academic pursuits and lifestyle. Needless to say, the young man got in over his head and was now under great financial pressure to keep up with the monthly payments as well as his school tuition and expenses.

This is an all to common story for many young men and women who go off to college, and are away from home for the first time in their lives. It seems that credit card companies target collage students. Surely, they must know that these individuals have no readily available parental supervision, that their lack of experience in life makes them a bit compulsive, and that they don’t usually have a lot of extra money lying around, which makes them vulnerable to looking for other sources to finance their lack. Talk about a set up!

Getting back to the story above, of course the older gentleman was very angry with his son, but his main concern was "debt getof." He was not sure, how he was going to handle this problem. He felt stuck and overwhelmed. Mainly because he felt obligated to help his son pay off the debt. He was torn between having his son continue his education or leave school to get a job and pay off the debt. If you have collage age kids that are out on their own, you may want to keep this story in mind and do a little prying of your own; otherwise, you might be the one saying debt getof.

What could possibly be the downside to consolidating your debt? Isn’t debt consolidation a flawless solution to your debt problem? Well, yes, debt consolidation can give you a big advantage over your debt situation, but keep in mind, that its not removing the debt, it’s actually making it more manageable for you.

Take for instance; if you have several credit cards with various high interest rates, it would be a lot better to owe one lump sum with hopefully one low interest rate. Not to mention the fact, that you would only have one payment date to keep track of instead of several dates. And trying to make those payment deadlines when your paying on several credit card accounts can be pure hell at times. They really stick it to you with those late payment fees.

So yes, it’s much nicer to deal with just one debt payment then it is to deal with several payments. Again, that is a management aspect of debt; consolidating your debt does absolutely nothing to shrink your debt. The debt amount stays the same; the only difference is that it’s under one umbrella so to speak. Which means, that those several other credit cards are at a zero balance. O’boy! Therein lies the potential problem. Those original credit card accounts that carried a high interest balance are free to be used again.

I hate to say it, but many people fall prey to using those same credit cards that they just paid off with a debt consolidation loan and end up in deeper debt. That is the drastic downside of using debt consolidation. If you don’t have the discipline to get on a regimented debt repayment program, and are not able to stay within a spending budget, you could very well end up in a worse debt situation. That is definitely something to keep in mind if you’re considering consolidating your debt.