Before you go through a debt consolidation, you should prepare. This will lower costs and help you make the most of your debt consolidation loan. Your first step should be to find someone to help you.

You need to learn more about your finances and develop some new ways of handling your money (or lack of it). If you keep doing what you were doing, you will keep getting into debt.

A certified credit counselor from the National Foundation for Credit Counseling (little or no cost) or a Christian financial advisor from Crown Ministries (they're free) will help you with a personal plan. This plan may or may not include debt consolidation but it will include budgeting and saving. Imagine not living paycheck-to-paycheck! It can happen to you.

Once you have a basic outline of what your expenses are it's time to hack-and-slash. This means to eliminate the bills that you don't need. Then pay off the little stuff.

First, take a look at your monthly bills. Is there something you don't need? Like a newspaper subscription you don't read or yard service? If so, that can go!

You will be surprised how much you can eliminate by being very honest about the difference between want and need. Cable is a great example. For $80 a month or so you can get a great selection of entertainment. For $30 a month you get a basic package. Not as much fun, but you get the major new shows and news. Turn up the thermostat by a few degrees and turn on the fans. Use your creativity. If it can go, cut it. You can always add it back later. That's the hack part.

The slash part comes when you eliminate those little debts before debt consolidation. You do not want to spend the next ten years paying for your new running shoes. So pay the minimums on the big debts while you pay off the small ones before debt consolidation.

Once hack-and-slash is done, you should be left with your necessary bills and the medium and large debts. What is a medium debt? A medium debt is a debt that you could payoff in a year, with work. The dollar amount depends on your income and debt level. This is where you and your credit counselor have to make a decision before debt consolidation.

Do you try to payoff the medium debts or include them with your debt consolidation? If you have only one medium debt and your situation isn't desperate any more, many financial experts would say to pay it off before debt consolidation. If you have more than five medium debts, you should probably consider including them with your debt consolidation. If you have two to four, you and your credit counselor need to make a decision. Perhaps pay off one over a year, one at tax time and include the rest in the debt consolidation.

In other words, pay off the small stuff before you go into debt consolidation and make a great effort to pay off the medium stuff, too (if you can).

Your certified credit counselor, who has been at your side so far, will walk you through the next stage on the road to financial freedom. This is the point where many people will begin debt consolidation.

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