With interest rates at record lows, now maybe is the time to do some housekeeping on your personal finances and see if there is a way to reduce your monthly expenditure. This cannot only improve your standard of living in the short term but also provide a financial buffer against unforeseen circumstances - particularly in these current troubled times.

We all acquire a range of debts over the years. The mortgage loan to buy our house is probably the largest and longest, but we may also have taken out loans to buy cars, furniture or to fund one off lifestyle events such as marriages or special holidays. Then there are the hidden debts accrued on store or credit cards.

Many of these debts will have been set up on a fixed rate, fixed term basis at times when interest rates were relative high compared to today. Credit and store cards have always been a relatively expensive way of borrowing anything other than short term debt. So why not look now at tidying up all those bits of finance by wrapping them up into one loan and using the proceeds to pay off all your existing commitments?

This is the principle of a debt consolidation loan. By looking to pay off all your existing debts using the proceeds of one, new, single loan it may be possible to reduce your monthly expenditure by securing either a lower interest rate charge or a longer period over which to repay - or both!

Credit and debit card debt is the hardest to clear since you need to look not only at the current balance but also at what you may need to spend during the next few months. Whilst the aim is to review all spending down, one of the key challenges is not to revert to hard core borrowing on cards for the future.

When looking at all your existing loans make sure to factor in any early settlement or redemption fees before deciding how much you need. With loans that only have a short time to run (say less than six months) it may not be worth settling these off.

Having now clearly identified the amount you need to borrow to clear all your debts and start again with a single loan, you may have one of two choices.

Smaller balances, say those below £7,500, should be available on a non secured basis for those with a good credit history. Loan amounts in excess of £15,000 will probably require some form of additional collateral, or security, before being advanced. Most people can only offer up their house as security in this instance so you will need to have some free equity (or the difference between what the house is worth and the amount owed on any mortgage) to qualify.

Those with security and a good credit history will qualify for the best rates and terms. Larger loans with security involved are more expensive to set up but charge the lowest rates compared to unsecured loans. However, the risk of losing your home if you do not keep up with the repayments on a secured loan is very real so you should not enter into it if you do not believe that you can make the payments.

Your existing mortgagor may well consider lending you additional money if you have free equity so make sure that you give them a call to see what may be available. A quick internet search will reveal many organisations that specialise in debt consolidation loans for all types of customers including those with a poor credit history.

Debt consolidation loans can make life easier and free up income to help improve your standard of living. Free advice on debt management is available at any Citizens Advice Bureau office.

Browse a range of useful websites about Debt Consolidation Programs.