With the highest ratio of personal debt to income in the world, Australia is carrying a great financial burden that threatens to overcome many citizens unless they can get their money under control. In the midst of the property boom, many people have taken on personal loans in order to invest – and in the process, they may have over-extended themselves.The global economic downturn has severely impacted those carrying a high level of debt. Possible job losses, increasing interest rates, and the high cost of living can make a person’s financial situation very precarious, and in these dire circumstances, many are turning to different methods of debt management to regain control.Methods of Debt ManagementThose finding it difficult to handle their debt repayments are not alone, and it’s possible to get help with debt management. Working to control and reduce debt can be a great stress reliever, and lead people to develop sound financial habits.Careful budgeting is probably the most widespread method of debt management. Fund allocation and limits on spending will get people thinking about where their money is being spent, and it allows them to get a clear picture of how much income they have available to clear their personal loans. The Australian Financial Counselling and Credit Reform Association has a wealth of information on consumer resources available at AFCCRA.org – very often, just speaking to a counsellor and getting advice can make a huge difference. Most debt consolidation companies will provide you with an initial free consultation.Another method that has become more popular recently is debt snowballing. This method is useful for people with more than one personal loan or other form of debt, and has proved to be quite successful. It is deceptively simple: debts are paid off in order from lowest amount to highest, with only minimum payments on others. This method of management is probably so successful because it gives people a psychological boost every time a debt is paid in full, and encourages them to keep it up.Sometimes, however, getting help with debt will require more than budgeting or snowballing. When monthly repayments are too high, the best option is debt consolidation.Managing Debt with ConsolidationHandling payments and interest on several small loans can be a nightmare, and can absorb a large chunk of someone’s disposable income each month. In the case where there isn’t enough to make all repayments on a loan and still have enough for the necessities like rent, groceries, etc, it’s probably time to consider a further personal loan to roll all debts into one, and deal with a single lower payment each month over a longer period of time. Keep in mind that these type of loans are incredibly hard to get and in the overwhelming majority of cases it requires a 100% perfect credit history.Debt consolidation can be a godsend. Frequently, people opt for consolidation with a low, fixed interest rate where they can budget for a single payment. Although it’s possible to consolidate under a single, unsecured personal loan, those with assets such as a house can have the loan secured. This may seem rather frightening, as it allows the lender to force the owner to sell the asset in the event that they cannot pay, but in reality it means a even lower rate of interest because the risk to the lender is reduced.Debt consolidation is really the best option for someone with a large number of smaller debts and with a steady, fixed income. Take, for example, someone with a number of credit cards that have been maxed out. Credit cards typically have a very high rate of interest compared to a personal loan – interest which must be paid first each month. If the total debt is replaced with a single loan with a house or car as collateral and with a lower rate of interest, the total amount can be spread out and less interest overall will be paid.Debt management, and debt consolidation in particular, is vital for good budgeting and financial security. It is highly likely that debt management services will become more popular from now on, and consumers can rest assured that such services are regulated by the Commonwealth Government. More information on regulation, basic advice on credit and debt, and details of common scams are available from the Australian Securities and Investments Commission at Fido.gov.au.