The debt payment reminders are coming thick and fast – for your credit card, your other credit card and maybe a car loan or personal loan, along with home loan repayments.

Trying to manage multiple debts can be so overwhelming that it’s easy to stick your head in the sand.

But if you can’t make your repayments on time, the first thing you should do is contact the company you owe, explain your situation and agree on a payment plan.

You might also consider rolling your debts into one loan – a process known as debt consolidation.

Story Wealth Management chief executive Anne Graham said combining your debts into a single loan and only having one repayment either fortnightly or monthly can make debt easier to manage.

“It helps you feel like you’re in control,” she said.

“You’ll be able to keep track of what you owe much more easily.”

Combining different debts into one loan with a lower interest rate can also save you money.

But don’t fall into the trap of thinking this is always the case.

Debt traps

If you put your credit card debt onto your home loan, even though you’ll have a lower interest rate, you will probably be paying off the loan for longer.

Ms Graham warns against using debt consolidation as a band aid for a deeper issue, adding that some people combine their debts but then end up taking on more debt.

“Consolidating debt doesn’t necessarily solve the problem of racking up debt all the time, but it might help people reduce debt once they face their problems,” she said.

She said moving debt from a credit card with a higher interest rate to one with a zero-interest period only works if you pay off your debt within the interest free window and cut up the new credit card afterwards so that you are not tempted to use it.

The snowball method

Ms Graham said rather than consolidating your debt in some cases it is better to use the snowball method, which is all about building momentum to clear your debts.

“One reason why you might not consolidate debt is that there is a theory that if you have four different loans and you focus on paying off the smallest one first, it gives you a sense of accomplishment,” she said.

“So once that one is paid off, you can redirect the payments to the second biggest one and then the third biggest and then the last one.”

If you’re considering consolidating your debt it pays to shop around, not just with your current bank but with a range of lenders, Ms Graham said.

This could involve doing research by using comparison websites such as Canstar, RateCity, Finder and Compare the Market.

Your credit score will play a role in whether a lender approves your loan application, and you can get your score free by applying through reporting agencies such as Experian or illion, according to the Moneysmart website.

If you need help managing debt, you can get free, independent advice by contacting the National Debt Helpline on 1800 007 007.