Most of the services that help consumers with loan consolidation will encourage their clients to consolidate all of the debts into a loan. They will say that the best course of action is to refinance your home or to get a loan on home equity in order to consolidate the debt.

When you have excessive debt with high interest rates your first instinct may be to do it, and it may work quite well since you do qualify for these types of loans. Because this solution presents and answer to a difficult financial situation, you might feel that it's the answer to your debt problem.

But before you start thinking about debt consolidation, you should know that certain things work well in a refinance or home equity while others don't. The reason to wait is that there are likely debts that would be less to pay individually than if they are included into your planned consolidation.

One example is a medical bill that has no interest, which should not be included in debt refinancing. If you consolidate this debt, you will end up paying interest that you would not pay if you paid the debt separately. Therefore, it is a good practice to exclude debts that have low interest or no interest at all, such as medical and student loan bills, from the consolidation.

But it's not just the low interest bills- some high interest bills would also be best if kept out of consolidation. It may sound contradictory, as it seems as if the high interest debts are the reason for many consolidations, but it does require further thought. The idea is to pay less than you would have otherwise by getting the consolidation. For your high interest debts, take the ones that can be paid off in under a year and calculate the amount of interest you will pay for it on its own versus the amount you will pay for it in debt consolidation.

It is therefore important to be certain that the debt consolidation is making things easier with the consolidation instead of making things more difficult by including debts with no interest or low interest rates.

It is easy to pay off debts if you are aware of what types of debts to consolidate and which ones to leave out. Since your higher interest debts will be going into debt consolidation, it's easier to pay off other payments more easily by consolidating into a loan with a single payment.

Learning the basics of what debts to roll into debt consolidation will result in an amazing amount of savings in the long run. Your peace of mind will be the invaluable result.