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Efficient debt management for a debt free future

By Janet Lacey
Published: Monday, February 20th, 2012

Debt refers very simply to money that you owe to a lending institution. With today’s stressful lifestyles, nearly everyone owes something at some point. Car loans, home loans, college loans or credit card loans may all be considered debts. It is now almost impossible to manage without accruing debts in some manner. But, nobody likes being saddled with too many debts. Stress levels may spike when debts are not addressed and handled, efficiently.

The amount of debts owed of course varies significantly from one person to another. Factors like income level, efficient handling of money and life style compromises affect debt discharge rates. Your ability to handle these debts refers to debt management.

Recognizing how much you owe

This is not as simple as it looks. You would need to sit down with a pen and a calculator and add up all your outstanding amounts. You will need to take into account daily living expenses and see how much you can afford to pay out each month. Debt management requires that you divert money from unnecessary expenses towards reduction of your debts. This will be possible only if you know how much money you can pay out every month. A careful budget analysis will not solve the problem but will throw light on the actual debt amounts. Without this exercise, many families flounder around in circles without a solution in sight.

Efficient debt management

There are many professional debt management firms that will handle your debts for you. After taking down all the details of your outstanding monies, they will calculate just how much you owe. Many credit counseling firms also take charge of dispersing your money to the correct recipients. Instead of dealing with multiple payments, all you do is make one payment to the credit company which will then take care of your multiple payments. People are increasingly becoming very stressed with time and many feel overwhelmed when it comes to debt handling. In such cases, it becomes useful to have a trained professional offering their guidance and assistance. In addition to helping clients, credit handlers offer one more advantage. They often negotiate with the lending institutions to accept lower rates or smaller payments per month. This makes it easier on the individual who is trying to clear his debts.

Debt management plans

Forming a debt management plan is useful when it comes to efficient discharge of your debts. A debt management plan or a DMP is made between an individual and a debt management firm. It details exactly how much and at what times the individual will make payments to the debt management firm. A DMP often involves lower interest than what the individual might have managed to negotiate by himself. These low rates usually apply as long he keeps up his payments. The payments usually include the firm’s fees.

Such firms work to help you look forward to a debt free future and attain peace of mind.

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