They say money can't buy happiness, but it does buy a lot of things that make us happy, from toys to trips to tools that help us achieve our goals in life. Unfortunately, when you spend too much money, all that debt steals the happiness and replaces it with stress.

Multiple and high-interest debts, especially consumer debt, can become a juggling act of payments. In that situation, a debt consolidation loan can tempt you with its ease and lower monthly payment. In extreme cases, debt relief services may seem the answer. But are they? Here are some signs that you should consider consolidating your debt.

One note, however: Debt consolidation only works if you follow these conditions:

  • Get a debt consolidation loan or debt relief program whose interests and fees are – over the life of the loan – lower than if you paid the debt off yourself
  • Pay more than the minimum on your debt consolidation loan
  • Eliminate the bad spending habits that got you into multiple debts in the first place. That means cutting the credit cards. (Keep one for emergencies only.)

You are drowning in debt. 80 percent of Americans are in consumer debt, and of those, about a third are delinquent in payments. If you are skipping payments, or worse yet, putting payments of one credit card or loan on another card just to put off the inevitable, then consolidating to one loan can help you get a handle on payments. This might also be worth considering if you are being hassled by creditors or considering bankruptcy.

You can only make minimum payments on your credit cards. Making only minimum payments on a credit card means you can take decades to pay off even the smallest debt. Consolidation loans run five to 10 years, even if you only pay the minimum.

You cannot do it on your own. It is possible to negotiate with credit card companies for lower interest rates and even forgiveness of part of your debt when circumstances warrant it. However, if you've not succeeded in this or are unable to try, a debt relief service can, for a hefty fee, take over this task. The best ones also provide debt management and financial counseling to help you develop better financial habits.

You need to clean up your credit. Debt consolidation isn't always for people in dire financial straits. If you are anticipating a major life event, such as moving, expecting a child or attending college, you might want to consider debt consolidation to get out of debt faster. These are not only major personal events, but financial ones as well. Paying off your debts can not only help you with extra money, but also helps your credit score, which can help you secure better interest rates on mortgages or tuition loans.

You are willing to put all your spare money into paying off the debt. Debt consolidation does not work unless you are willing to make the sacrifices to get out of debt. If you are paying $950 to various credit cards, the idea of a consolidation loan at $640 is tempting. However, if only pay the minimum on the loan, you'll most likely end up paying more in interest than if you'd kept up the payments on your existing debts. Instead, you need to continue to pour that $950 into the loan with the goal of paying it off early.

Debt consolidation will not solve your financial problems. Only learning to budget and discipline your spending can do that. However, there are times when debt consolidation can give you the boost you need. For more information, check out our other articles on debt consolidation and financial health.

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