When you have a number of debts hanging over your head, struggling to keep on top of them can give you many grey hairs. The thing is that, just like a seemingly insignificant hole can fill up a boat with water over a period of time, having many different loans can sink you as well. How? Take credit card debts for example. Sure, flashing plastic at a store can be really gratifying. Retail therapy can be satisfying, and there's nothing like the radiant glow of a person who's shopped and found some great bargains. But getting the colossal billing statement at the end of the month can be one giant blow on the face, especially when you find that you can't afford to make anything more than the minimum. Sure, that works. But that's only on one credit card, what about the others? If you are like most people, you probably have other credit cards in your name. And what about the basic expenses of daily life, like rent or mortgage payments, car payments, food, electric bills, gas? When you add all these expenses up, you may find that your salary just can't cover everything. That's when you're in trouble.

For some people, debt consolidation is the most effective solution to their problem. Make sure you read through the loan contract before signing anything. Debt consolidation is a way for you to clear your unsettled debts by taking out one big loan that covers them all. This loan is called a debt consolidation loan, and it is usually secured against one of your assets, such as your home. Because you put down collateral for the loan, the risk to the loan company is lowered, and they are better able to offer you a reasonable interest rate than an unsecured loan, and for a longer period of time for repayment. It also means that if for any reason you are unable to keep up with the payments for the debt consolidation loan, the loan company can take the asset you used as collateral. If the asset happens to be your apartment, then you are going to be without a roof over your head.

So debt consolidation is not without risk to yourself. However, there are a number of advantages to this scheme, such as:

* You will have a single payment to make monthly to one loan company, instead of juggling several bills.

* The sum that you have to pay monthly can be not as much as the total amount you were paying off beforehand.

* Because it is a secured loan, it has a fixed interest rate.

* Assuming that you keep up with the monthly dues for the debt consolidation loan, your credit score will not be affected, as would have happened if you fail to pay your credit card bills or other loans.

In order to make sure that debt consolidation is your only choice, do some research beforehand, and consult with a debt advisor or a loan arranger. They may be able to come up with a solution more suitable to your financial position.]