You have probably heard the expression "Hope for the best, but plan for the worst". Anticipating and planning for problems is the best way to weather a job loss. Creating a savings account for emergencies is the best way to prepare for such events.

But in reality, because of financial situations, it's not always possible to create that emergency savings account. Sometimes preparing for problems just isn't enough. If you consolidate debt, you can reduce your monthly payments to fit your budget and you can gain peace of mind while you undergo your job search.

If you have lost your job and bills are piling up, debt consolidation helps you reduce your monthly payments. By lumping all of your debts into one larger loan, you make only one payment each month. This payment will be lower than the total amount of payments from your multiple loans and bills you have now. This gives you a chance to organize your finances and budget without getting further into debt trouble.

Most debt consolidation loans have a fixed interest rate so your monthly payment will remain consistent. You won't have to worry about rising interest rates adding extra pressure to your finances.

Having one loan instead of multiple loans is just more convenient and practical. Trying to juggle many loans and bills runs the risk of missing payments or defaulting. Consolidating debt helps you stay on track with your monthly payments. This impacts your credit rating positively - a hidden benefit while you concentrate on your job search.

Debt consolidation loans can be secured or unsecured. A secured loan requires collateral such as your home or other asset. The interest rates are generally lower and if you use your home as collateral there can be tax benefits. Examples of secured loans include home equity loan, home equity line of credit, cash-out mortgage refinancing, automobile refinancing, 401(k) loan and whole life insurance loan.

Unsecured loans include personal loans. They do not require collateral but the trade-off is you pay slightly higher interest rates.

Job loss creates stress and uncertainty in your life and your family's lives. It's not always possible to plan for these types of problems. But you can use debt consolidation to lower your monthly payments and that can help you manage your monthly finances.