The very best way to consolidate debt is to avoid debt in the first place! Barring that, most consumers need to take advantage of debt to make purchases, like cars, or flat screen plasma televisions, or homes. Then there are credit cards! It's so simple to get a credit card, and even easier to think of the little pieces of plastic as free money. But the meal you bought two years ago, and are still paying for today costs a lot more than the original $50 you paid for it, right?



So how to you consolidate your debt and get it paid off? Many consumers try to do it on their own, and there are a few simple tricks to do it. Get a couple of low interest credit card offers in the mail, and transfer all of your balances to those low interest cards, then be diligent about paying them down. That plan could work, but it could also take time.

That plan also requires the consumer to stop spending using credit cards, and for many people, that's a hard habit to break. For many, it requires a lifestyle sacrifice they're just not prepared to make. Think about it, four credit cards with $5000 limits could lift a couple's lifestyle by $20,000 during a year.

The downside of living like you have an extra $20,000 is that the following year, that couple is now $20K in the hole. That debt has to be paid from somewhere, and so a couple who made $60,000, lived like they had $80,000, now is faced with living off $40,000! That's a 50% reduction in spending, going out, whatever it was they did to run up the debt in the first place!

The best way to consolidate credit card debt is to create a budget. Trim the fat. List mortgage, utilities, insurance, car notes, all of the fixed costs in one column. These are the bills that must be paid every month. Next, list groceries, gas, and incidental expenses. Then list the nonessential expenses, like leagues, clubs and shopping trips to department stores, fast food purchases, daily lattes.

The next step is the hardest part. Find ways to cut down or back on everything. High electrical bill? Switch to low cost bulbs, or turn off lights. Water the lawn once a week. Get rid of the yard service and mow it yourself. You're going to have to be tuff, and give up some stuff, but it's a short term sacrifice to reach a long term goal.

Now take the extra money and pay down the credit cards. You can do it one at a time, beginning with the card with the lowest balance, or if that's too much you can use a debt consolidation service and their expertise to help create a monthly budget you can still live with.