Debt consolidation is the act of taking one single personal loan from a money lender with a purpose of paying other small payday loan. It is a recommended financial management approach since it is very advantageous to the borrower in the sense, that he or she owe money to only one debtor. Debt consolidation also helps you as a borrower to activate your credit card, manage your budget and enjoy your cash. It is important to recognize a good and bad debt before you start consolidating debts. Bad debts are the ones that are acquired for consumption purposes. Such debts referred to as consumer debts do not help the borrower in attaining any asset and that is why they are referred to as bad. On the other hand, debts like mortgage debts are known as good debts since they are aimed at helping you the borrower attain an asset. You also have to sort out debts according to their interest rates. Some have higher rates than others. This practice will help you to plan a budget and know the amount you need to borrow in order to consolidate your debts. Once you decide the amount you need to borrow, look for a bank that has friendly rates. If it is possible, deal with your bank as you may have an established relationship. The bank already has your documents so the loan process will be easier. It is advisable that you choose a short repayment period in order to avoid debt fatigue. Once you have the funds with you, it is recommendable that you pay off loans with higher interests rates first. Debt consolidation requires that you carefully follow your budget plan. It is a great way to solve your money matters if you choose a repayment period and monthly installments that suit your needs. You can as well seek the services of a professional for perfect debt consolidation.