Debt Management… We have all heard the phrase, but today is the day you start to do something about it.
The proper financial supervision and management of debt, a process commonly known as debt management, is a crucial practice of healthy personal finance.
The art of optimizing the use of credit and debt can be complicated. Yes it can be hard and even confusing at first. But remember that I have created this resource, this helpful finance blog, with only one purpose in mind. To help consumers and homeowners with debt and personal finance. This means that I will help you learn all you need to know about debt management and making smart financial decisions. If you can’t figure out a financial issue then just contact me and I will help.
Once you are practicing proper debt management you will continuously improve your financial well being, and become wealthier and wealthier with every passing day. That is a promise.
What is Debt Management?
The process begins by closely monitoring the cost of borrowing and comparing it to the benefit gained from the use of the money borrowed.
In addition, make adjustments that improve both the costs and benefits of borrowing. Identify opportunities and capitalize on them by altering the use, amount, and source of the borrowed money as applicable to the opportunity. Use a proven and highly recommended budgeting guide
Also significant consideration must be given to the implications of risk that is associated with the debt or money that is borrowed.
The principles of these habits and practices focus on leveraging ones credit and debt wisely so you can get the most benefit for the least amount of cost. Ultimately this result will save you a considerable amount of money which will make you richer with every passing day.
Why and How to Start
By utilizing smart debt management habits you will start to become consciously aware of the details and specific costs of the money that you borrow. You will find it much easier to make decisions that optimize your use of financing. It may be a little tricky but you will quickly get the hang of it just like anything else.
After a while you will start to navigate your way around a credit card statement with ease. Even better you will eventually become assured of what debts are beneficial or worth it, and which debts have to go. Once this happens the hard part is over.
All you need to do now is adjust how you work it…
Adjusting your use of debt over time can make a big difference in cost and savings over a lifetime. So you don’t have to be perfect right from the start, you simply have to start and never stop.
Always Have a Working Plan
Perhaps the best thing to do first is to simply write down all the credit accounts with the amount of debt, fees paid, interest rates, and any other costs. If you have overwhelming credit card bills you may want to lower the total amount of debt you owe with your creditors and settle debt through debt settlement and other debt relief solutions such as loan modification.
You also want to list and take note of the perks, if any, that are offered through any of the accounts. These are typically reward programs or perhaps access to some sot of service or tool the lender offers.
Another extremely important characteristic of all your debt accounts that you should take note of is the ability or the lack of the ability to borrow more on the account. You want to know all your credit limits. You may want to even call each lender and ask for a increase at some point.
Also important to take note of is the consequences of not paying debt. There may come a time when you can not pay all your debt and financial obligations and you may have to make some hard decisions and not pay on one or two of your debt accounts. You need to know exactly which debt not to pay. You need to prioritize your debt.
You want to prepare for the unexpected circumstances. Life will challenge your personal finances. Always plan for the unexpected. The availability of credit and your ability to borrow can play a big part in hard times.
Create an accurate snapshot of your current and expected use of debt, expected household income, and your expected expenses. This is an essential part of budgeting. Once you know how you are spending your money you will know how you can save. We have more information on budgeting as well as creating a monthly budget. Check out our budgeting guide it’s helpful.
Optimize your use of debt as existing opportunities allow and as the future financial environment provides new ones.
This sounds more complicated than it is, just use common sense and pay attention to opportunity. For instance keep your eyes open for lower interest loans. Make adjustments to what debt you pay off as well as how quickly you pay it off. When you are able to use reward points or other perks try to do so, and use the savings to pay down other debt. Simple examples like those are all it takes to drastically change your financial future.
Closely monitor the terms of any variable debt especially credit cards and other high interest debt. These tend to change quite often.
As time goes on and your finances begin to gradually improve, you will find that your creditors may be willing to lower interest rates as well as offer you better financing products that carry a reduced cost and perhaps even a few more perks. So from time to time give your lenders a call and ask what they can do for you.
Benefits of Debt Management
If you start practicing smart debt management today, you will start down a path towards financial freedom. Though that destination may seem far away, if you start here, and don’t stop or delay, you will ensure there is a day, that neither money nor debt will be a fear.
If you choose this path many others will appear. Your life and your time start to have more and more options. You will be offered bigger and better perks. Lenders will offer more money for less cost.
The best part about all the offers of more money, more opportunity, and more choice is that you will find that you need all of it less and less.
Just remember to start.
Take Control of Your Debt and Personal Finances – Starting From the Bottom
Debt help is a must if you don’t think your current levels of debt are sustainable over the long run. This is especially true if you are a homeowner.
In today’s economy you need to make sure your current lifestyle and your home is affordable.
If you are suffering through a financial hardship of some kind and need debt relief, or if you are in foreclosure and need to to find foreclosure help then by all means do so. This finance blog provides a ton of information on the “who, what, when, where, and how” of debt help. Take advantage of it.