Debt consolidation is becoming an increasingly popular debt management tool used to help people get a handle on their debts. The principle of debt consolidation is simple: take out one low cost debt consolidation loan to pay-off all of your creditors, leaving you to handle just one loan repayment amount per month at a manageable rate to suit your finances.

Free debt consolidation advice is available from a variety of sources, including the Internet. Finding free debt consolidation advice specific to your circumstances though is not always easy, with some free debt consolidation sources giving apparently contradictory advice on debt consolidation matters. But, regardless of the approach you take to debt consolidation there are some basic rules that we should all follow to insure that the debt consolidation product we end up with is right for our situation.

Free debt consolidation advice

Free consolidation tip #1

Add up your debt: Before jumping headlong into a debt consolidation program you'll first need to work out what the total sum of your debt amounts too. Check the outstanding balances of all your credit cards, store cards, finance agreements and even your bank overdraft. For the purpose of debt consolidation do not include your mortgage.

Free consolidation tip #2

APR: Find out the APR that you are currently paying on your various debts. This will give you an idea of the amount of interest that you are paying on each part of your debt. If you add the APRs together and divide by the number of different credit cards, store cards etc. on which you have an outstanding debt then you will come up with the average APR that you are being charged. Don't be surprised if this is 15% or more.

Free consolidation tip #3

Work out your income vs. expenditure: Make a personal income vs. expenditure budget. This should include a column showing all money coming into your household on a monthly basis and another column showing all expenses that are going out each month. You'll need to factor in new purchases on credit cards, store cards, as well as all of your direct debits and monthly, quarterly and annual bills. Ignore current interest paid out on outstanding debt balances.

Free consolidation tip #4

Analyse expenses: Consider each of your expenses in turn, and ask yourself if you can reduce the cost of this expense. For instance, by changing your gas & electricity supplier you may be able to save up to 25% on current payments. Once you've gone through this process recalculate your income vs. expenditure to work out how much money you have left over to make repayments on your debt.

Free consolidation tip #5

Contact your major creditors: Before seeking further free debt consolidation advice you should contact your creditors and let them know you have a debt problem. They may be able to restructure your debt repayments to alleviate your financial situation.

Free consolidation tip #6

Shop around. Contact a leading high street lender, such as Natwest (http://www.natwest.co.uk) and a leading internet lender, such as UK Consolidation Loans (http://www.uk-consolidation-loans.co.uk). Get quotes and see what advice you get. Don't rush into anything, and make sure the deal you get is right for you. After all, you are the one who is going to have to live with it. Time spent now will save you in the long run!