Television commercials and mass mailings may make debt consolidation seem like a simple process. Often by the end of a 30 second ad, the formerly anxious, debt ridden consumer is smiling and shaking hands with a caring debt consolidation counselor, and all their problems seem to have vanished.

While there are many options available to consumers, the three most commonly advertised forms of debt consolidation are: credit counseling, debt management programs, and debt settlement. Consumers sometimes mistakenly assume that these options mean the same thing, involve the same process, and are interchangeable. This idea is wrong on all accounts.

Credit Counseling is often the first stop for those interested in eliminating debt. It is simply professional help to develop a budget, encourage discipline, and reevaluate spending. This is a good option for people who have a steady income, and have just made some poor financial decisions.

Counselors offer advice and explain your options, however, they do not cut your monthly payments, or reduce the amount you owe. They can contact creditors to lower interest rates, but you can do that yourself. Most importantly, credit counselors can help you to know when declaring bankruptcy is your best option. It is now necessary to meet with a certified credit counselor for six months prior to declaring bankruptcy.

Debt Management Programs are the way that credit counselors help to pay down your debts. They take one monthly sum, and redistribute it to cover all your bills. Basically, the counselor takes your paycheck, keeps what is needed to pay your bills, and gives you an allowance. These programs ensure that your creditors are paid, and you are making progress toward getting out of debt. Only about 35% of all the people involved in credit counseling qualify for a debt management program.

Debt Settlement is the third option available to consumers, but experts advise caution when using these types of programs. Basically, consumers make payments to the agency, where the money will sit until the creditors demand payment. The debt settlement agency will then renegotiate your debts agreeing to pay pennies on the dollar. The creditors usually agree to these terms, as the alternative is to receive nothing at all.

Frankly, this is a dangerous, and unethical way to go. First, you are not saving any money, as you make full payments to the debt settlement agency, who is earning interest on the held money. Second, if you miss even one payment to the agency, oftentimes you lose all the money youve paid to them as a fee. Finally, it is your credit, not the agency's that takes a beating in the process; this option can reflect as poorly on your credit score as declaring bankruptcy.

Understanding the programs available to you is essential as you begin the process of debt consolidation. Credit counseling can be a great tool in helping to discipline spending, and create a plan for the future–just make sure you know what youre getting into.

If you've managed (or mismanaged) to get yourself into a boatload of debt, there are ways to insure that this never happens again if at all possible, and the cornerstone of these ways is a sound, well-thought-out budgeting program. While this may not seem like a very sexy answer to what appears to be a huge problem, it is in fact the most essential part of your future going forward from here.

If you don't manage your money better, you'll only end up in the same position all over again. I have known many who have dipped their toes in this well far too often, and it has been not only their financial ruin, but sometimes also at the cost of their families. Debt and sensible budgeting are definitely things to get a handle on! Let's look at some of the ways you can do that.

First of all, if you are married, this needs to be a joint effort. Nothing will bring ruin to a marriage faster than a spouse running rampant with the finances. You need to be in agreement here, both on the totals and the categories of spending. There needs to be give and take. There needs to be some hard questions. There needs to be an accounting of your financial lives that takes into account your needs, and what you can live without. You need to be totally honest with one another, or this is simply a waste of time.

Many people who are in debt trouble resort to the envelope system, where you put each month's allotment for certain expenses into an envelope in cash, and when this is gone, so is the budget for the month for that item. Obviously, things like your mortgage won't fit in this envelope, nor should automatic payments. This is intended for controlling discretionary spending that has gotten out of hand and needs to be tracked.

It is surprisingly effective. Some of the categories you might consider are clothing, entertainment, eating out, even Starbucks. I know people who were shocked to discover that they spent several hundred dollars a month there!

The main point about implementing a budget needs to be the long-term aspect of all this. It will do you next to no good to do this for a month or so. Sound household budgeting is really no different than using a budget for your business. Most people wouldn't consider running a business that way, so neither should you run your home that way. It is YOUR business!

In this day and age when prices keep creeping up and saving is getting harder and harder to do, make it easy on yourself and find the extra dollars to save and invest in the money you already have.

There are free budgeting forms available all over the web. Find one you like and start using it, and maybe, just maybe you'll find more money at the end of the month this time.

Having poor credit can certainly impede you the next time you want to purchase something that you have set your heart upon, though lack of proper credit standing will mean having to forego such things in life. Yes, bad credit can not only mean that you dont get what you want, but you may even spend sleepless nights worrying about how to fix the problem, though there are many people that will proffer you advice as to how to go about bad credit repair; even so, the best advice would certainly be to do it yourself.

Several Steps to Take to Repair Your Bad Credit

There are several steps to take in repairing bad credit- the first of which is to take the simple step of requesting a copy of your credit report from the credit bureau. Once you have this, take a few moments to review it, and make note of any potential errors or questionable entries.

In a do-it-yourself credit repair, the next process is to visit the website of the Federal Trade Commission. Find out what consumer rights protect you and how you can use them to your advantage.

Once you are aware of your rights, you will find that you can get false and incomplete transactions removed from your credit report. This is a huge step in repairing your credit. Removing such transactions must be done by credit agencies, which they must do to keep from paying penalties.

Once this step is complete, you should write a letter to the credit reporting agencies, disputing what you've found to be wrong with your report. After taking this step, be sure to continuously monitor the progress of your complaint with the agency.

It may take a month or so before errors are verified by the credit agency. If you were right, the credit agency will acknowledge these claims, and the errors will be corrected. Your credit report and credit standing will thus be improved.

With persistence and hard work, repairing your own less-than-perfect credit report is doable. Following proper and sound advice on how to do so, can lead to your credit scores improving within a short time, and the only cost to you is the time and effort it took to contact the credit reporting agencies.

I posted a new article on the DebtSmackdown.com blog and thought I'd link it from here as well, in case you're not signed up to receive automatic updates over there.

Make An Extra $50 Payment On Your Credit Card This Month

If you want to get your cards paid off anytime soon, you need to make more than the minimum payment every month. That article will give you some tips for doing that.

If you're thinking about using debt consolidation to get rid of your high-interest credit cards and other consumer debt, there are some things you should know first. It's not always the best option.

I've just finished a special report about debt consolidation that outlines the good and the bad.

You can get more information about my Debt Consolidation Tactics report here:

InsideDebtConsolidation.com