At first glance, debt consolidation seems like an obvious choice for people whose finances are in the red. But for all its positives, there are also some negatives-enough to make a smart homeowner consider debt consolidation alternatives.

It's hard for a homeowner to turn on a radio, open a phone book, or check the mailbox without running into an advertisement for debt consolidation loans. And while the claims of tax deductibility and one low monthly payment are true, the astute homeowner should also consider the not-so-beneficial effects of debt consolidation.

Debt consolidation's dark side

The pros are well known-combine all your payments into one at a lower interest rate. But there are many cons, as well. First, there are unscrupulous lenders who are more than happy to charge you an enormous fee for a debt consolidation loan. Second, the loan's low monthly payment might free up some immediate cash, but over the long haul, you'll wind up paying big bucks in interest payments. And third, if you take out a new line of credit to pay off old debts, some scoring systems may classify you as a credit risk.

Alternative reality

If the dark side has you thinking twice, consider some of the debt consolidation loan alternatives.

1. Debt management services: There are numerous debt management services that will work as an intermediary between you and your creditors. They will help you work out a repayment schedule, generally at a reduced interest rate.

2. Negotiate your own deal: Creditors are business people, and some will be willing to work with you to develop a payment arrangement. This will take some legwork on your part, but it could save you fees that you'd otherwise pay with a debt management service.

3. Personal, unsecured loan: If you don't want to take out a second mortgage, which is the most common debt consolidation tool, consider a personal, unsecured loan. Make sure that you choose one in which the overall rate is lower than the rate on your credit card.

No matter which method you choose for consolidating your debt, what's most important is that you take action. Whether you use a debt consolidation loan or one of the alternatives listed here, the key is to make spending binges a thing of the past, and better financial times a permanent part of your future.