If you have already studied your monthly expenditure and can see no way to make savings, and find you have no way of earning extra money, then your next option may be a free debt consolidation loan.

By free, I mean no extra charges or arrangement fee for the consolidation loan; your chances of getting an interest free consolidation loan are just about zero, unless you have a rich relative or friend. Should you go down the debt consolidation route, try to avoid any loan arrangement which involves upfront fees, or any extra fees at all for that matter. Whether that is possible will depend on where you live, but in the UK, it is not difficult to get a free debt consolidation loan.

One benefit of a consolidation loan is that it does give you a chance to plan your finances in a way that could, if you're careful, make you debt free by the end of the period of the loan. By debt free, I will be realistic and mean "debt free apart from home mortgage", which most people have little option about, and mortgage debt can be worthwhile financially anyway.

Taking out a debt consolidation loan will not, of course, make you instantly debt free. However, it may be that such a loan will give you a chance to structure your finance plan over a 3, 5 or 7 year period. With the correct attitude and perseverance, this may be an excellent opportunity to improve your finances in the long term, resulting in being debt free by the end of the loan period.

The consolidation loan will reduce your monthly outgoings, thus giving you the opportunity to save. By getting into the saving habit instead of debt habit, you will be able to set aside money to pay cash for the things you need in the future; if you are determined and disciplined, even that next car purchase can be in cash, rather than an expensive loan. The result: you become debt free.

In the financial reality of a consumer, if you cannot to afford to pay cash for something, then you probably cannot really afford it at all. The one exception is the house, where the investment potential and rent saving change the financial aspect.

Can you imagine, waking up at the end of the consolidation loan term and finding yourself debt free? What a nice feeling!