In 2002, the Federal Reserve cut interest rates eleven times 
in an effort to jumpstart the American economy. Job losses have 
been high and the stock market values remain low; consumer debt 
is high and consumer confidence is low.  

According to the Federal Reserve, U.S. consumers owe $1.73 
trillion in credit card bills, auto loans and other loans 
excluding mortgages through the end of August 2002. These 
numbers only continue to climb, up from $1.67 trillion at 
the end of last year and $1.56 trillion at the end of 2000.

With consumer debt at this all-time high, debt consolidation 
may be a good move for a large number of American consumers.

Financial professionals agree that gaining control of your own 
financial destiny requires discipline in the implementation of 
three important steps. These steps are budgeting, financial 
planning, and building a financial safety net. 

Whether you are earning a few thousand dollars per year or 
hundreds of thousands of dollars per year, a personal budget 
will help you to reach your financial goals more easily. Simply 
put, a budget is the most important tool you can use to gain 
control over your money.

The point is to gain control over your money rather than being 
controlled by your money or perceived lack thereof. The former 
permits you to build a bright future, while the latter tends 
to lead to a dark and gloomy existence. 

If you have been directly or indirectly affected by the downward 
turn in the economy, you may be feeling the financial pressures 
felt by hundreds of thousands of other Americans.  

Fed rates may be at their lowest levels in decades, but the 
nature of consumer debt is providing little relief. Credit card 
companies have generally failed to pass along interest rate 
savings to the consumer --- maintaining the higher interest 
rates on the debts owed to them. Other consumers find it 
nearly difficult to get bank financing due to a recent job 
loss. Does this sound familiar to you? 

Debt consolidation can provide great relief for many in their 
budgeting considerations and decisions. After all, bringing 
your debts together under a single, smaller and more manageable 
payment can remove the pressures of finding the money to cover 
your multitude of payments.

While a debt consolidation loan may seem to some to be an 
utopian concept, there are options many have never realized 
were available. 

When strapped for solutions, many folks realize they have money 
available in their retirement accounts that can be used to solve 
their short-term solvency problems. In fact, almost one third 
of Americans tap their IRAs or other retirement money to meet 
financial needs before retirement. They do so even knowing that 
they'll pay Uncle Sam hefty taxes and penalties. However if you 
really need money, there may be a smarter way to tap your 
retirement savings.

Experts advise that you not touch your retirement savings for 
anything other than retirement income. That is good advice. 
Fortunately, it is possible under special circumstances to 
acquire loans against your 401(k) accounts.

Beginning in 2002, even the self-employed small business owner 
with no employees, and the independent consultant could open 
his or her own 401(k), called a solo-owner 401(k), and borrow 
from it just as employees with big companies can. 

Weigh this option against the others available to you. It only 
makes sense to take out a loan rather than to take a hit in 
heavy taxes and penalties for drawing your retirement money 
early. With a loan, you can take advantage of our historically 
low interest to solve your short-term financial shortfalls. 

When all is said and done, the most substantive realization 
you can make is to realize that this economic downturn is a 
temporary and cyclical event. There is no sense in throwing 
the baby out with the bath water. Keep your retirement equity 
intact. Take it from me, you will thank yourself when you 
finally reach your golden years.