Debt Management Solution

Introduction To Debt Management Solution

A few years ago things were going great your salary was going up and your working hours increased, so you decided to buy a car/a house/a boat on credit. A few years later, your salary went down, the job turned bad and now the credit rates are getting so big that you feel like you're not paying for anything else anymore. You need to find a solution to effectively manage your debt.

Debt Management

The first thing you need to do is establish whether the debt, or your expenses can be decreased in any way. The best way to figure this out is by starting to manage your debt, either on your own or with the help of a debt management company or debt management computer software. In most cases, managing your debt leads you to realise that you're spending a lot more money than you can afford.

Here's a few things to consider in order to establish good debt management:

  • When your income allows it, try to pay off more than the basic payments on your debt. Even if it sometimes makes you feel this is taking your funds away from other expenses that may at the time seem useful, in the long term this strategy means that your interest rates will go down and the total payment time will continuously decrease. Someday, you will be very happy you did this.
  • Try to build a budget for your household. Calculate general unavoidable expenses (credit rates, electricity bills, whatever you definitely have to pay for and cannot go without each month) and then establish, based on what's left, how much you can afford to spend every month.
  • Try to build your expenses budget to be less than the money you have available and try not to spend everything you earn. You'll be surprised how much money you can pay off your debts if you only buy the necessary things for your household for a few months.
  • If you don't think you can make all these calculations on your own, a debt management plan is the next best way to tackle your problems. A debt management plan is when you send a monthly payment to a company who then use that payment to pay all your creditors. The good part about this is that you don't have to worry about the calculations as the company will do it all for you. Debt management companies can sometimes also speed up the debt payment process, completing payments in a shorter time than you may have originally been able to.

Debt Consolidation

Debt consolidation is a symptom cure and is recommended only as a last resort. It is effectively a way of paying all of your loans by enlisting in one, even bigger loan. Debt consolidation has the bonus of adding up all your payments into one monthly payment. However, although you are only paying for one loan the interest could equate to more than all of the initial smaller loans put together. It is also recommended to be very careful with solutions like home equity and debt settlement. This is because as well as being a very risky solution, your credit score may decrease, meaning that at some point in the future, when you really need a loan, you might not be able to get one.

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Debt Management Solution