Friday 2nd November, 2007 

Don't overlook look debt consolidation loans as a means of debt management.

Steven Baillie, Sainsbury Bank, suggests that when taking out loans such as home improvements, buying a new car etc, you should use the opportunity to examine existing debts and consolidate expensive debts into to a cheaper loan.

Debtwatchdog believes the principle behind this point has some merits. If you find yourself in the position where you are taking out another loan then review your other debts. If the interest rate for the current deal is cheaper than your other debts then consolidate the more expensive debts into the cheaper one.

A word of caution though, debt consolidation will relieve the pressure on your finances, freeing up more money. Use this spare money to reduce your debt. Research shows that many people who take out debt consolidation loans will get further into debt.

A consolidation loan used positively is an excellent way to address your debt problems. Used in conjunction with a Statement of Affairs and a change in attitude towards spending a debt consolidation loan will give you the breathing space you need to address your debt problems.

If you like someone to review your financial situation you can submit an SOA for our debt forum members to review.