My mom is an avid seamstress and she has several hundred bobbins of thread; she’s careful to keep them all in one huge container-they aren’t really organized, but they are consolidated. Whenever she needs thread, she knows where to go and after a few minutes of rummaging she has the color she needs. Debt is like thread-it is accrued in small amounts and isn’t something you think about too much, but it’s always around and needs to be managed. If you’re like the average American, you’ll have a bunch of minor debts that need to be managed-you owe a few hundred bucks to the heater repair company, the automobile mechanic, the roof-repair service, and the lawn service. Then there’s the two-hundred you still owe the neighbor for putting up a fence, the few hundred pledged to the Rotary Club, and the big past-due account at the kids’ karate studio. Taken together it’s about a thousand bucks and although you’re good for it all, just managing it is a major headache.
Debt consolidation is a lot like keeping thread bobbins in a single bin. Get all the debt information gathered together, organize and prioritize, and manage the debt before the debt runs roughshod over your summer vacation. Budget for debt repayment and stick to the budget. Make the minimum monthly payments on all debt, and put all of the remaining budgeted money toward the account with the highest interest rate. If all the accounts are charging the same interest amount, put all of the remaining money toward the account with the smallest balance due. If there’s an easy and inexpensive way to combine two or three of the debts into a single debt, then do it. After all, the debt isn’t going to go away if you stuff the bills into the kitchen drawer; they’re only going to go away if you pay them off.