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5 Principles for Debt Management
Debt Management - 5 Principles to help you get your debt under control!
Introduction
Debt consolidation and refinancing have become thriving industries in America these days. American personal debt is at the highest rate we've seen. Creditors are more and more willing to give out credit cards, or let people easily qualify for home equity loans so they can refinance or consolidate debt. Not that refinancing is bad, but often times, we feel that since we've reduced our interest rates, we can afford "a little bit extra" credit as a reward.
BusinessWeek says that total household debt in the US was more than 100% of our disposable annual income last year. The average person has more than $8000 in credit card debt.
The bottom line is that our personal debt is growing at an alarming rate. You can now charge your fast food meals at many restaurants, paying interest for years on something you consumed in one sitting. Many people have taken steps to address their debt problems, including consolidating debt to lower interest rate cards, or to home equity loans, or at worst case the dreaded "B" word, Bankruptcy.
5 Principles of Debt Management
1. Create an accurate assessment of your debt situation. Make a list, chart or whatever you're most comfortable with, of all your debts. Be sure and include the amounts, interest rates, and expirations dates (especially on any no-interest for ## days type loans). Be sure and note any old accounts that you've got "laying around", such as that department store credit account that you opened to get the 15% discount. You can now get a free credit report online. You should make sure that you've got a credit report and FICO score from each of the 3 national credit bureaus: Experian, Equifax, and TransUnion. The FTC advises monitoring your CREDIT REPORT activity ON ALL 3 BUREAUS. Order your 3-bureau report from CreditReporting.com today. If you've got bad credit, paying down your debts is of utmost importance!! Click here if you need help understanding your credit score. Depending how bad your score is, you may also consider additional measures to repair your credit.
2. Make a budget and stick to it! Making a budget helps keep from increasing your debt, while you're trying to pay it down. Be specific and detailed in your budgeting. Except for emergencies, you should only be spending what is accounted for in your budget. Some people have found it helpful to keep a 30 day log of their spending. Carry a little notebook, or some index cards with you, and write down everything you spend each day. You'll probably be amazed at how much money you spend on things you want, and don't really need. The smallest things, such as that $3 cup of coffee every day, can slowly eat away at your finances. This will help keep you from getting further in debt. Your budget should define how much money you'll send to each of your creditors monthly and how much you need for bills, and how much is left for discretionary spending. Try limiting your discretionary spending to things you can buy with "pocket cash". This may be hardest thing you've ever done, but you won't get further in debt if you only spend what you have.
3. Pay off the debts one by one. Maintain minimum payments to the rest of the debts, but pick the debt with the highest interest rate, and send extra payments to pay it off. There is a proven psycological benefit to being able to take a debt off of your list.
4. Consider debt consolidation or debt restructuring and possibly refinancing your home mortage. Lower your credit card debt by 70% by consolidating. With interest rates down, it also may be time to refinance your home mortgage loan and cut your monthly payment. You can get free mortgage loan quotes at LowCostLending. When you refinance, make sure closing costs and other fees don't outweigh the savings in your monthly payment. Another option is to get a Home Equity Loan. Home equity loans are good because they allow you to deduct the interest on your income taxes. Remember though, new credit is not a license to incur new or more debts. Once you've transferred a balance by consolidating, or refinancing, don't add more charges to the old account. If you've got a lot of open accounts, you may want to close some of them, but you shouldn't necessarily always cancel the old account. Having a good payment history with a few existing accounts can be better for your credit record than many cancelled and new accounts.
5. If necessary, get help. You may choose a credit counseling service, or debt counseling and debt help service to help with each step of your debt solution. Credit counselors can add accountability to your debt solution, and also serve as a source of encouragement. They are used to dealing with people with bad credit or poor credit, and can help you create a custom debt solution. They can suggest money lenders that might be more willing to make a loan to someone with a lower credit rating. Once you start reducing your debts without incurring new ones, you'll start to see your credit score rise.
Resqdebt signs big lease in Allen - Dallas Morning News Consumer debt consolidation and counseling firm Resqdebt has leased a large office in Allen. Brokers with real estate firm Jones Lang LaSalle said Friday it's one of the biggest such deals so far this year in the Collin County suburb. The 82,223 ...
How to make the best of a debt consolidation loan - MyFinances.co.uk When you start finding it difficult to keep up with your monthly bills because you have so many different accounts to pay each month, it may be a good idea to consider a debt consolidation loan. Debt consolidation loans help you manage your debt ...
Get help managing and consolidating debt - The State Mounting debt can put ever-increasing pressure on a household’s finances and lead to possible long-term credit problems. Finding a solution to personal debt is not always easy. But it can be done, often through a careful debt management and ...
Mortgage company expands to Mass. - Boston Globe At a time when financial institutions are struggling to stay afloat, one Ann Arbor-based mortgage company is growing. Gold Star Mortgage Financial Group announced yesterday that it is doubling it's number of offices by expanding service in 11 states ...
House prices slow with consumer confidence - MyFinances.co.uk House prices across the UK fell by 1.1 per cent during November, which is the biggest monthly drop since December 2006. Prices in London also took a hit, with the sharpest drop since August 2005 taking place in October. Average residential property ...
State Banks Ready To Offer Help To Late Payers - Inside Costa Rica Credit customers of the Banco Popular are finding relief as the state bank has decided to hold off on collections of defaulters, victims of the current financial crunch. The bank is offering to temporarily freeze customer debt. Víctor Rodríguez ...
Student-loan consolidation choices shrink - Pittsburgh Tribune Review Kari Schoeneweis will face more than $60,000 in student loan debt when she graduates from Carlow University in spring. She plans to do what her older siblings did and consolidate her loans to reduce the monthly payments. "I'm terrified of the loans I ...
