Credit card debt consolidation means taking all your credit card debts and “consolidating” or combining them into one loan. This makes it easier to pay your bills, since you’ll have only one due date to remember and one payment to make each month.

Some other potential benefits of credit card debt consolidation include:

• lower interest rate
• If you make fixed payments, your loan (and debt) will have a definitive end date
• In some cases, you may be able to get the loan amounts reduced prior to credit card debt consolidation

The first step to credit card consolidation is figuring out where you stand in regard to your credit card debt. You’ll want to obtain copies of all three of your credit reports from the major credit bureaus (Experian, Equifax and TransUnion.) You are entitled to receive one free report from each credit bureau every 12 months. This article explains 3 Ways to Get a Free Credit Report with No Hidden Fees.

If there are any errors on your credit report, including debt you paid that is showing as outstanding, now is the time to clear it up. This, along with your most recent credit card statements, will give you a clear picture of your existing debt. This way, you’ll know how much debt you need to consolidate.

Another important step before you complete a credit card debt consolidation is to calculate your monthly budget and figure out how much you can realistically pay each month toward a consolidated loan. If you can’t keep up with your minimum payments right now, what size payment would you be able to afford? The idea is not to get deeper in debt with another card — it’s to start seeing your debt diminish, month after month, as you pay it off on time with a lower interest rate than you have right now.

You can use an online budgeting program like Mint.com or any other method of your choice. Some people prefer pen and paper or a spreadsheet program like Excel.

Items you’ll want to include in your budget are:

• groceries
• health and beauty aids and other necessities
• gas
• housing
• utilities
• communications (cell phone, Internet, etc.)
• car payments and insurance
• health care costs (like prescription and non-prescription drugs, co-pays for doctor’s visits)

It’s also realistic to include a small amount for entertainment and emergency expenses that pop up. If you currently put 10% of your income into an emergency savings account, continue to do so! This is an excellent practice that can save you from having to use your credit cards in the future.

If you regularly donate 10% of your earnings to a favorite charity or church, also continue to do this — just be sure calculate it into your budget. These are not areas to cut corners when times are tight. The good feelings and good karma (or whatever you want to call it) when you help those with even less than you have pays for itself over time exponentially.

What if you calculate your budget and you realize you have nothing left over? Look at your expenses and (aside from savings and charitable donations) see where you can cut corners. Eat out too much? Drive when you could take public transportation? Have a $300 car loan where a smaller, less expensive car would serve the same purposes? Be brutal. You want to see your credit card debt go down, and debt consolidation is a good way to do it.

There are a number of ways you can perform a credit card debt consolidation. If you go through a debt consolidation firm or work with a lawyer, your representative may negotiate to have some of your debt “forgiven,” erasing up to 50% of your debt before you make a payment. This is called “debt renegotiation,” and is not necessary for debt consolidation — but if you are facing a lot of debt you can’t pay off, it can help you avoid bankruptcy.

Then, you (or the lawyer) will negotiate terms for re-payment, based on how much you can afford to pay per month and a reasonable interest rate.

It’s challenging to find a reputable debt consolidation firm, however, so you may want to consider other methods to consolidate your credit card debt.

The easiest way is simply to transfer all your credit card debt onto a new, 0% interest credit card.

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