What are the advantages and disadvantages of consolidating debt.?

I am in the process of trying to get out of debt(or close to it) as fast as possible. The main thing i'm worried about is my credit card debt which is $7,000-8,000 because my student loans and my car have good rates. Is it worth it to consolidate my cards into one payment or should i just try to pay one card off at a time and pay minimums on the other cards? Any advice, or personal experiences would help.

What are the advantages and disadvantages of consolidating debt.?
The primary advantage is purely mathematical -- if you can consolidate to lower interest rates, then you pay less interest and pay the loans off faster.





The primary disadvantage is psychological -- if you take out a home-equity loan, for example, to pay off your CC debt, but never made the effort to balance your income vs. expenses, then you'll find that your CC debt will build right back up again -- and you'll have that *plus* the home equity loan.





The first, most important task is to ensure that you can live your life on 90% of your income. Then you'll be able to work off the debt and have it not build back up again. Once you've reached the point where you're living beneath your means, debt consolidation makes sense.





Good luck,





Doug
Reply:It really depends on what kind of a spender you are.





If you are in control of your spending I would consolidate and pay off the loan. I think 1 payment is easiest and could save finance charges as well.





If you tend to spend on your credit cards I wouldn't do this. It is so easy to consolidate and then charge the cards back up. Make sure you don't do this!!





If you want to pay off without consolidating concentrate on the lowest balance (or highest finance charge) and pay as much as you can on it while still paying the minimums on the others. Continue until all paid off.





I did this both ways. The first time I got a loan...paid it all off and found myself in double debt within a year. I then went through the process of paying them one at a time..much more difficult, but a lesson learned.





Good luck, now that I am debt free I never want to go back to owing anyone money!!
Reply:Well, lets just say that by paying the minimum on other cards, you are going to prolong the time you take to pay them all off. Best is if you just keep 1 card, and consolidate the rest under a lower interest.





You can request for free debt consolidation information here, no obligatory. It won't harm to check out their rates.





http://snipr.com/1nn0k





Hope this helps.
Reply:The disadvantage of consolidation for most of them, is that you then can't use the cards. I would keep the card with the best rate, pay your minimum payment on that card, cut up all the other cards and pay as much as you can until they are paid off, then pay the remaining balance on the card you want to keep. That way you still have one card for an emergency. Your credit rating is not only based on the amount of debt you owe, and payment history, etc, but on the percentage of debt to available credit. So if you have $5000 in available credit and you are always at 4500, it is a negative against your credit score. The most important thing is that you create a budget and stick to it.