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It is necessary to understand that consolidating debt is a lot like sorting dirty laundry: You are not really improving the situation; you are just moving things from one pile to another. It is crucial that you deal with the behavior that got you there in the first place to find a long-term solution to your problem. Your first step before deciding how to consolidate your debt is to determine what you want to achieve. You should ask yourself:

• Do you want to lower your interest rates?
• Do you want to lower your monthly payments?
• Do you just want to stretch out the terms on your loans? *Experts advise if it’s one of the last two reasons you should tread carefully.

Borrowers who are only solving symptoms with debt consolidation are on the verge of making the problem worse. As shown above there are only three ways to lower your monthly payments: qualify for a lower rate, put up collateral to reduce the risk and the rate, or stretch out the term of the loan.

When you are looking to consolidate debt you must be careful what moves you make to do this or you can get yourself in even bigger trouble. Do not get yourself talked into taking another loan to pay off the money you already barrowed.

If you are able to get one based on your present difficulties you will only find yourself paying interest on top of interest by using this method. The same goes for your idea to take a second mortgage on your house to help you consolidate debt and pay it all off at once. Your home should be the most prized thing you own and so the last thing you want to do is encumber it with more debt. Interest rates on second mortgages will be much steeper than what you are paying for your first mortgage.

Many people will turn to debt consolidation companies to negotiate with creditors and then to manage their monthly payment issues. This can be a good solution but even this plan can have problems. These companies are popping up all over the country and not all of them are honest. Many of these companies have been involved in dishonest activities with their customer’s money. Before deciding on one of them investigates them thoroughly. Check with the Better Business Bureau. Make sure that when you consolidate debt you aren’t simply finding more trouble.