Debt consolidation is a great idea. It is better to be in control of one debt rather than trying to cope up with multiple debts. Because with multiple debts (even if the sum of debt is not big) you have to control all that deadlines and sums for all payments and if you are late - you have penalties. With one debt that consolidates everything you don't need wasting your time on coping up with 10 or 20 different recurring payments. So - definitely debt consolidation is a great idea.

But, any great, popular idea absorbs bad things. And this article is explaining some typical mistakes that turn debt consolidation from help to curse.

Mistake #1. Effect of Psychological Relief.

Those who have ever been in multiple debts know how it feels to control all payments that you need to make. And as always at this very time you are short for money. This is a big stress. And to get rid of this stress you are ready to do almost anything.

This is exactly when you are about to make mistake #1 and for the sake of feeling better with one debt line, you can 'allow' debt consolidation companies or services to squeeze more money from you. They know how you feel with multiple debts, and they know that their help gives you a relief, and this is nice candy for you. And while 'tasting this candy' you can miss the point when debt consolidators are taking more than necessary from your pocket. Don't forget that for them it's business, they don't help you just because they want to help you. They do it because their debt consolidation programs give a chance to cover all your debts and make money for them as well.

So, before checking any debt consolidation companies, programs, their opportunities and rates and taking the final decision REMEMBER - you are paying them from your pocket for this debt consolidation help. There are many companies on this market and if someone is likely to squeeze you for bigger interest, find another.

Mistake #2. Unsecured Debt Consolidation VS Secured Debt Consolidation.

The difference between these two types of debt consolidation is simple. With secured debt consolidation you get lower interest rate, BUT secure the payment with some property, quite often your real estate can be used as collateral. And unsecured means bigger interest rates. Everything is simple.

Wow, lower interest rate!

Yes, on the surface it looks fantastic. But when your house is used as collateral - be aware - now if you miss the payment you can have big problems with your property. With your home! Think about it twice, three times, or no matter how much, but think. Surely the lower percentage is a great win, but you must be absolutely sure of what you are doing when you are taking a secured loan.

There is one tip that can help you in getting secured debt consolidation help - you can refinance your car. But then be careful with your car, because it is used as collateral. Now it 'belongs' not to you only.

So, the choice between unsecured and secured debt consolidation is a tough one and only you can make it. But please, balance your decision.

Mistake #3. I consolidated my (credit card, consumer, etc.) debt - I am free!

You can't even imagine how many people - after getting debt consolidation help - started to think that problems are over. And started to... spend more. Don't ever do that mistake! You are not Rockefeller, at least right now. And you have just started to get into control with your debt problems.

Even if you got low interest rate you are still doing your best to pay off. So - you got some free cash - invest it into something viable (but please no HYIPs). After you have made a wise investment this game with "paying money - getting money" becomes fair. Yes, you are still paying off the debts, but you have extra stream of regular profits that makes you feel safer. And make versatile investments, don't focus on one business or niche: have some money invested into virtual real estate, some into bonds, etc.

Before you have eradicated your debt, it's no time to crazy spending of money. And after you have eradicated the debts, it's definitely not a time to spend money - now it's time to earn money and build your financial independence.