One common suggestion for breaking this vicious circle is to employ debt management. For thousands, this has seemed like the way out, the way back to financial health. But there are pros and cons to debt management, no matter what form it takes. Being aware of those will help you decide if it is the salvation in your particular circumstances.

First, what is 'debt consolidation'? At base, it's a simple proposition. Gather all your multiple sources of debt into one debt and make a single payment every month to a single debtor.

But for that to be helpful several things have to take place at once. After all, whether you pay $150 + $50 + $25 to three debtors or $225 to another it's the same amount. With online bill payment it isn't even necessary these days to make out three checks. You aren't even saving on postage stamps!
In order for debt management to be useful one or more of the following has to occur: (1) either the total monthly payment has to decrease , or, (2) the net amount of interest has to decrease, or, (3) the actual total debt has to go down as a result of consolidation. Which, if any, of these take place depends on the specific debt consolidation plan you have planned.

In the ideal case, which rarely happens, all three take place. The most common scenario is that the monthly payment is lowered. This has several advantages to the debt ridden. When the payment is lowered, you have a much higher chance of being able to pay it consistently.

That helps prevent piling more debt (interest and late charges) onto existing debt. You also have a much more relaxed frame of mind, knowing you can meet the monthly debt obligation without sacrificing other needed items.

It's surprising, though maybe it shouldn't be, how many people that are troubled by debt problems, don't actually know how much monthly interest they're paying. Part of the problem may be that they really don't want to know. Considering how much it sometimes is, one can hardly blame them.

But the first step back to financial health is a good diagnosis. If you're paying $200 per month in interest charges alone on a monthly net income, say, of $4,000, then you are paying 5% PER MONTH of your income for essentially nothing. It's not entirely nothing, since you are enjoying the things you bought early. You would have had to save to purchase them outright. But is that worth 5% of your income?

When that $200 a month (and for many, it's much more) becomes the total you can pay each month, you have reached a point where you will never pay off the debt. If all the money is going to interest none is going to principal. That may be an extreme case, but consider how much of the monthly payment in your circumstances goes for interest versus repayment of principal.

Suppose it's 90% interest, 10% principal. That's approximately the case for the average home loan for the first several years. You can use an online calculator to see how long that will take in your situation.

Suppose, for example, you owe $10,000 at 7%. You could pay only $116 per month, but it would take you 10 years to pay it off. The interest would cost you $3,933 - almost 40% of the total amount.

Now that you've seen your situation, you need to take two further steps. Develop a budget that will allow you to make payments as large as you can handle to get the bills paid off. You could use the 'snowball method' and pay off the smallest one first. Then apply what you were paying to the smallest to the next smallest (now the smallest), until you've reached the end.

Alternatively you could pay down the largest bill. That would save you the most in interest charges, but it's hard for many people to stick to it, when they see such slow progress.

Now, for the hardest - and most important - step (which should be carried out simultaneously with the first): stop borrowing. You should not allow yourself to incur any further debt until you have paid the first down to a reasonable level. That level is zero for credit card junkies. For others, it may be in the 5% range. For some with good willpower and are willing to eat the overhead, 20% is the maximum.

Facing reality and making a commitment to long-term change are the two hardest things for anyone who has entered financially turbulent waters to do. But they are the bare minimum required, if you want to recover your financial health and independence.