Have we borrowed too much money?

My wife and I are in the situation where we are not sure whether we have borrowed too much money. We have a large home loan ($375,000) and an investment property loan ($280,000). I have a personal loan of $18,000 which was taken out to buy a car. We also have three credit cards and a store card debt totaling $26,000. These cards are regularly at their maximum. Do we need to consider consolidating our debts?

Over-extending is a trap that many young people fall into and the main problem here is most probably your lack of effective budgeting. It sounds as though you urgently need to make sure you are not spending more than you are earning. However, to answer your question, yes you most certainly do need to consider debt consolidation. If you do consolidate your debts the most important thing to get right when you borrow money is the interest rate, which needs to be significantly lower than what you're paying over all the debts you intend to consolidate.

If you are really struggling then a financial counseling services would help you. They are available in every state and territory and provide a free, independent and confidential service.

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