Alright! We all know that it is the era of do it yourselfers, and that can even be applied to those looking to consolidate their debts. Consolidation is the term applied to the process of taking another loan for clearing off previous multiple loans, so that you have only one debt to look after instead of the many previously. For those of you who do not want to hire an attorney or an expensive financial adviser, completing the process of consolidation can be achieved personally, with just a simple few steps, which should carefully be adhered to.

ESTIMATION:
This is one of those steps, which people do not want to take. It is very important that you take out all debt related papers and calculate everything including the interest that you will have to pay, say five years from now. it would be wise to not include student loans in this list because you get a comparatively longer duration to pay them back and the interest is lower. Also, calculate your credit card debts and outstanding dues, if any. Calculate the exact amount you have to pay every month for all of your loans individually.

BUDGETING:
This is another important step, write down your monthly salary, your monthly installments meant for loans, your personal important expenses. List them all out and subtract expenses from your salary. You can additionally use this effective money for paying your debts off quickly. List out taxes and any other expenses you may have to pay. Calculate the amount of debt that you are left with. If this is too significant, then only you should move forward with consolidation.

NEGOTIATING:
In case you are very near to bankruptcy, there are banks that you may be able to negotiate interest for consolidation loans at. These banks looking at your condition, ask for collateral, which can be anything of value, in order of the value of your loan, but you should never put up your house as collateral. The lower interest rates are offered keeping in mind that in case of non-payment they have your collateral to liquidate. This is the reason why you should never use your house as collateral, because then you may not be left with anything.

PLANNING:
This is the final step where you use estimation and budgeting to determine, how much money you need to pay monthly towards each of your loans and how much you are left with every month, to do so. This money should be used to pay off the installments of the loan that has the highest rate of interest and highest balance remaining. Continue doing this, until your debts keep getting paid for in the decreasing order.

CONSISTENCY:
The most important thing to remember is, to be consistent in your payment. Even if you can manage to pay only a little of your installments, you should still go ahead with it. In case you want to assume that you can add it in the next months installment payment, you are wrong. If you keep on stalling it, you will be caught in the vicious circle of debt and consolidation, that you would wish you could have avoided!