The total American consumer debt reached $2.4 trillion in 2006.

There are literally hundreds of ways to eliminate your debt. You can't turn on the TV, listen to the radio, open a newspaper or click on a web page link without hearing or seeing the latest miracle method to get you out of debt.

Some of these methods can actually be very effective. For example, a debt consolidation loan using the equity in your home can significantly reduce the interest you pay each month.

Others like debt settlement or debt negotiations can have a negative impact on your credit rating. Some companies promise to help you rebuild your credit rating after settlement but this is a slow process no matter whether they do it or you do it yourself. This method, along with bankruptcy should only be considered if all other options fail.

Before you consider any option to eliminate your debt you need to find out why you are considering this in the first place. Simply obtaining a loan or settling your debt is not going to solve the problem for most people.

The odds are good that once you have your debt under control you will start piling it on again. This is because most people take these actions without a plan to prevent this from happening again.

Another important point that you should consider is that for some there is no need to go through a 3rd party for help with your debt. It's very possible that you have all the money you need to pay your debts and other expenses and have the ability to impact the interest rates you pay.

I'm not just talking about a budget but a real plan for what you want your money to do for you. A budget is just part of the process. A real financial plan starts with setting your long and short term goals and working backwards from there. Every financial decision you make should be directed toward achieving your goals.

Your budget will simply be a tool to show you what you have and what your obligations are. Most importantly, it will put you in control of your finances so that you can make educated decisions regarding your spending and savings.

There is absolutely nothing wrong with consolidating your debt to get out from under those high interest rate credit cards. But if you are not careful you may end up with the consolidation loan payment and even more credit card debt.

If you are dead set on using one of the debt elimination methods to reduce your payments, take the time to consider what you are going to do differently in the future to make sure you don't wind up in the same situation, or worse in a year or so.

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