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The Simple Rules of Debt Management

By Janet Lacey
Published: Monday, November 19th, 2012

Debt is a universal problem and once a person falls into this trap, it is usually difficult to get out. The consequences of bad debt management are many. The insolvent has to face loss of property and possession, financial issues, litigations, family issues, loss of reputation, and most of all mental stress. With stress-related deaths increasing, one cannot highlight the importance of debt management better. It is pertinent to come up with a debt management plan before falling into an endless debt trap.

Not all people can manage their own finance. When people are not able to manage their finance properly or pay off loans and debts on time, they can approach debt management consultants. These professionals help and guide to make better decisions to fix the debt crisis. There are both government and private counsellors who can provide financial advice and assistance for free or for a nominal fee.

Simple Tips to Avoid Falling into the Trap:

  • Personal debt management should start right away when you borrow loans or use your credit Cards.
  • You should always ensure that you don’t spend more than your income and every debt or loan is paid well within the due date.
  • A simple budget plan will help you assess how much you earn against how much you spend.
  • You don’t need a consultants or counsellor to help you out with one or two loans. If you’re able to pay them on time and still save some salary, you are safe.
  • But, when the need arises and if you are not able to manage your finance you should accept the fact that you need a debt management counsellor and take help. The earlier the realisation sooner you’ll get out of your debts with proper guidance.
  • In general, when you are managing your own finance always ensure that you pay off high interest rate loans first. If you don’t, they will soon put you in a situation to borrow more money. So, prioritise the debts.
  • When you make purchases on your credit cards or withdraw cash on them, you should ensure to pay them off within the due date. Though there is an option of minimum balance payment that should be only taken as a last resort when you cannot arrange funds to pay off the entire billed amount. Once you get into the habit of paying only the minimum due amount, in a short time of 6 months, you are sure to default the credit card which will be bad on your credit score.

When you disregard your debts and take things lightly. You can find yourself in a worse situation in less than a year. It is easy to get into a debt crisis, but to repair your credit is it takes at least a couple of years. The rule is very simple, personally manage debt or hire somebody to manage it for you.

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