Being the best in the world is usually a proud achievement - but not when it comes to being in debt. Sadly, Australians are world leaders in personal debt. In Australia, mortgage, credit card debt and personal loans total over $1.2 TRILLION, which is more than 71% higher than five years ago.

Take the simple instance of credit card debt. A typical household uses two or three credit cards, often more. Owning multiple cards can be useful in managing your expenses, especially when you don't have cash ready at hand. It comes in handy during crises like covering hospitalization costs, or paying tuition fees for a child's education, or for urgent purchases.

But there's a downside to this kind of debt. Credit card interest rates in Australia generally range from 14.0% to 18.0% per annum. So if you borrow $10,000 on your card, you can expect to pay $196.95 to $280.96 in monthly repayments. Now here's an interesting factoid. When you start paying off only the minimum monthly amount due on your credit cards, if you owe $20,000 then it could take longer than 20 years to pay off your credit card debt in full! A general rule to use is that for every $1,000 on your credit card takes 1 year ( just making the minimum monthly payment)

In contrast to the typical American adult who is US$44,000 in debt, each adult in Australia carries US$56,000 in debt, a fact worsened by the recent stimulus package and various incentivies given to first-time home owners. Yes, most Australians are living dangerously beyond their means, and it's time to take control of your debt situation right now.

So what can you do to bring rampaging personal debt into line? Debt consolidation services are an ideal solution to this vexing problem, and can be a great way to solve your most troublesome money worries once and for all. The benefits of debt consolidation are that you now have only one loan with a single repayment schedule to meet, and which requires dealing with only one creditor. Often the repayments are smaller, because of lower interest rates, and this allows you to gain control over your debt faster, while having more cash on hand for other important expenses.

The right time to seek debt consolidation services is when 20% or more of your income is going towards paying off your credit card debt. This is usually an indication that your debt is getting out of control, and that it is time to take stock and make changes. First, make a list of how much you owe on each of your credit card accounts, and the interest rate you are paying on each one. Then, identify the debt that costs you the most, such as the credit card that charges you highest interest rates. Paying these off first will save you money.

Debt consolidation, by tying up many different loans into a single package, lets you more comfortably meet your debt obligations while providing you with a lesser interest rate too. You can negotiate a moratorium of three (or even six) months on your repayments while signing up for a debt consolidation service, and this will give you some breathing time to catch up on your debt.

You can choose a few (or all) of your multiple personal debt instruments to enter into a debt consolidation program. You may only want to consolidate your credit card debt, or you may include other items like home loans, mortgages and other personal loans that you incurred in the past. Debt help services will usually be able to guide you to the best combination that will help you save money while paying off what once appeared a crushing loan burden.

The important benefit of debt consolidation, of course, is that you will be able to preserve your credit rating, or even recover from a bad credit rating which was a consequence of failing to meet your monthly repayment commitments. But also beware that debt consolidation is no magical cure for your financial woes. You must also be able to clamp down on your spending, so that you don't simply use debt consolidation as an excuse to rack up even bigger loans.

In a September 2010 HSBC report, senior economist Paul Bloxham says in a 15 month forecast that Australia's interest rate will go up by 5 times, and the cash rate would be 5.75% by late 2011. Beyond that period, he also said, "We see further upward rate moves over the next year." In this scenario, staying out of debt is better than getting out of it!