I received the following email from a reader. I'll give my thoughts at the end and I'd like to get your thoughts for the reader.
"So here's the deal. I have bills beginning to pile up. I try to pay one and make good with them, but then others pile up and become more difficult to pay and its getting even worse now. I have a second job as a server, but the pay is getting worse due to summer and people going to the shore. So my idea was, in order to save my credit rating and attempt to not go into bankruptcy all while keeping my car and roof over the wife and kids (my job could actually be at stake if I do file bankruptcy), is to get a personal loan of about 20,000 to consolidate all irregular bills (ie small loan, credit cards and make current on bills that are past due approaching the 60-day mark) and have to just make one payment to the one big loan.
So, the question, do you or your readers recommend either going down that route (the big loan) and/or recommend a loan company I should go with (bank, some online credit company)? I haven't spoken to my bank or other banks just yet, but I have searched around online seeing that there are sites offering 1k-30k personal loans."
My advice, given my own personal situation, is to not consolidate the loans. I tried the same thing when I was trying to get out of credit card debt and it backfired on me. I did not change my behavior so I ended up running up additional debt on the cards I paid off and consolidated. I then had new debt to pay in addition to my old debt.
Withought knowing actual numbers regarding income and expenses, it's hard to offer any other kind of advice on how to handle the debt.
Reader, if you haven't already, I would recommend gathering all of your bills and writing them down. I would then use one of the debt calculators to determine the best method for reducing your debt. If you Google "debt calculators", you will get thousands of results.
What do you think?