Tag Archives: Debt Management

3 Essential Tools for Debt Management

Economic recession has forced people to take necessary steps to manage their financial situation. If you are planning for a debt free life in future then money management becomes a crucial task for you. These following tips can help you to get liberation from debt and prevent you to get into debt trap. The following steps will help in the process of debt management and also prevent you from incurring debt.

Calculate your total income:

First step to manage your financial situation is by tracking your total amount you earn. Include your stable income while calculating your earned amount then you will be able to see whether your income exceeds your expenses or not. The money that you receive as gift or gain by chance should not be calculated in your total income as these incomes are not permanent. Calculating your income will help you to determine the amount you can utilize to pay off your debt.

Analyze your requirements:

Before you plan to buy anything make sure whether you require it or not. If the good is not required then you can drop the idea to buy it. Try to focus on buying things that are essential for your daily life. Do not let your desire control you rather put a bridle your flamboyant lifestyle. Try to identify your needs and requirements before you plan to spend your hard earned money.

Maintain a savings account:

Creating a savings account and analyzing your investment plan is a crucial part of managing your money. You can create a budget and keep aside the extra fund that you manage to save after dealing with your monthly expenses. You should form an emergency fund that will manage to deal with your unexpected expenses. You might get tempted to spend these extra cash in hand but spending the amount can take a toll on your pocket in future. If you can not control your urge of over expenditure then make a list of the things that you require. This will help you to focus your attention on specific requirements that will control your spending spree.

These following steps are simple and easy tricks to manage your finances. While controlling your money you need to find out three things: you desire, your requirements and how much to save. Money management is not a laborious task. If you can track your mode of expenditure then you can save and manage your expenses efficiently.

How is a debt management program helpful for you?

People facing debt issues often consider debt management programs to resolve their present situation. In this kind of program, a debt management or a debt reduction company negotiates with the creditors to reduce the high interest rates of the debtor’s accounts, waive off the late fees to make the monthly repayment of the debtor more manageable while they are making a way to come out of their debts. Enrolling in this kind of services is optional, but if you are facing serious issues with your debts, you have no other options but to take professional help from such agencies. You will have to be fully committed towards this program to get the benefits at the end of the program. Here are some tips by which you can actually make a DMP work for you.

  • 1. Choose a Debt Management Plan:

Always find a legitimate debt management company that can really work for you and bring you out of your debt problems. Credit industry has already been in a boom because they maximum hit those kind of people who are already going through a financial crisis. These kinds of people don’t see any other options but to look for new credit to pay off their some portion of debts. At this stage, it is very important to consider only those types of companies who are really legit and won’t scam you. You may verify the companies with your local attorney general’s office or the Better Business Bureau and the Federal Trade Commission. A legit company will first understand your financial situation and then offer you related advices on your available options to come out of your debt problems. He will work out a lowest repayment plan in which you will combine all your accounts and pay your creditors through the debt management company.

  • 2. Get the DMP Plan in Written Document:

Make sure that you have the DMP contract with the debt management company in writing and signed by you. Don’t believe on any company who proposes a DMP on verbal promises. Your rejecting that company will be the best decision for you in long terms and stay away from being scammed. If you have something in writing, you can always take legal actions against the company if they don’t work according to the terms mentioned in the contract. Make sure that you have read and understood the terms and conditions in the contract very thoroughly, especially the monthly payments, fees, length of the time of the program until you become debt free.

  • 3. Make Sure DMP is Approved:

Once you are approved in the debt management plan, make sure that you contact all your creditors and inform them about your working with a credit counseling company. Don’t stop paying your creditors until you are sure of the DMP Company making the payment in the next month. If you miss a single payment, your creditors will turn your account into default and add late fees and other financial charges. One more thing that you want to make sure is that your creditors have approved the proposal put by your debt management company. Sometimes, the credit counseling company will say that the proposal will be automatically approved after you sign the contract.

  • 4. Commit Yourself to Make Regular Payments:

You need to be very committed towards making the monthly payments to the debt management company. If you miss one payment, the debt management company won’t make payments to your creditors and your creditor will immediately mark your account as behind for that month. However, if you inform the DMP agency in advance about your not being to able to make the payment for a month, they will work out some kind of arrangements for you.

  • Summary:

If you wish to restore your financial condition, debt management is a good option. But you must ensure that you are contributing your part to make the debt management plan perfectly work for you.