Are you having trouble meeting your expenses each month? Are you relying on your credit cards to pay for regular daily expenses without paying the balance off each month?

If you own your own home, you should consider the merits of a consolidation debt refinance. This would merge all your bills into one monthly payment that would be less than you're currently paying, and you will almost certainly save on interest charges, over-limit fees, as well as late charges .

A consolidation loan refinance will help you get some breathing room and give you the ability to clean up your credit. However there are things you need to consider so you don't put yourself in a worse position than you already are in.

You have three choices when considering a a debt consolidation scheme.

First, you may refinance your existing first mortgage. If interest rates are attractive, and you have enough equity after paying off your debt, this might well be your first choice to go.

If the prevailing interest rate is at or less than the interest rate on your current loan, this may be the best strategy. However, if the interest rate is higher than your current mortgage rate, be very careful. That's because you are not only paying interest on the debt you're you are paying off, you're subject to the increased interest on your basic mortgage, and that's probably not a good thing.

Your second choice is to consider taking out a second mortgage - This option is preferred if you don't want to take 30 years to pay off as you would be by refinancing your first mortgage. With this alternative you take out a loan for a specific amount of money and pay it back over 5 – 15 years.

The advantage with this plan is you pay off your bills and don't have the temptation you would have with a Home Equity Line of Credit (HELOC) to spend the extra money that may be available on other purchases that increase your debt. Another advantage is that you can find fixed rate second mortgage loans which, to my way of thinking, are preferable to variable rate mortgages.

Thirdly is to take out a a Home Equity Line of Credit (HELOC). With this option, you get a revolving line of credit that is available when you want to pay bills and expenses.

The advantage of a HELOC is that you only pay interest on the money you actually use. Even if your line of credit is $10,000, if you only use $5,000 you only pay interest on the $5,000 which will save you money.

If you choose a HELOC to consolidate your debt, proceed it carefully. Usually, the lender will set up the loan to maximize their leverage against the equity you have in your home. Your challenge is in resisting the temptation to spend the extra money. For example, let's say you have an additional $10,000 available in your equity loan after you've paid off all your bills. For many folks that's an invitation to spend that extra $10,000, so they descend deeper in debt than when they started. It can be vicious cycle.

Using a home refinancing to consolidate your credit obligations should be considered as a smart option for cleaning up your bills, but use it wisely, carefully. Don't put yourself in worse condition than where you started. And when you’ve paid them off, get rid of your credit cards! You'll sleep much better when they’re gone.