Self Help Debt Management Guide

Oct 20

If you find yourself in a disturbing financial situation where credit collectors have become your frequent caller or visitor or there is already a piling debt collection notices that you have to deal with, it is time to get some serious financial help from the experts. However you don’t really have to wait for these things to happen as you can already start a good debt management plan through a sound self help budget management process with realistic goals before you find yourself financially in hot water.

Begin defining a realistic goal

If you want to make yourself in control of your debt, it is crucial to define first a realistic goal under your current financial condition. Your first step is to make an assessment on your finances and ability to pay for your debts. It is smart to group your debts and expenses accordingly such as grouping those with a fixed amount to pay for such as payday loans, mortgages, insurance premiums and other loans with a regular monthly due.

Then identify those expenses that may vary such as for groceries, clothing, entertainment and other miscellaneous expenses. By doing this you can start setting your financial goals realistically by identifying which debt to pay off first (especially those with a higher interest rate than your other debts), those that you should pay diligently (to prevent additional charges and late payment fees to pile up), and those that you can dispense with (such as miscellaneous expenses) the amount of which you can spend for paying important debts. Make sure to set aside an amount intended for the basic needs like foods, health care, education and housing.

This will help you get a clearer picture about your financial capacity to meet your different financial obligations. Using a computer software program will help you manage your finances better and to help you program a sound budget on how to spend your income and to identify whether you have sufficient money to meet your financial obligations.

Negotiating with your creditors

In case you find your financial sources depleting, you can always help yourself by negotiating with your creditors. Sometimes it only takes explaining to your creditors about the changes in your financial situation and to ask them about the option of modifying your loan terms or payment plan. This will help reduce your monthly dues that will help unburden your finances. It is best not to wait until a debt collector begins nagging you with calls before you finally decide to negotiate with your lender. Debt collectors and collection agencies have their own way of working and ensuring that debtors pay off their dues as soon as possible. If you want to know how the process works, you can visit websites such as those of the Collection Bureau of America (check it out here) so that you have a fair idea of how to deal with them in case you ever need to. However, you are always in the best position to talk to your creditor before your account becomes delinquent and your lender still willing to help you.

Prevent mortgage foreclosure

If you find yourself falling behind your mortgage, you should contact your lender and explain your circumstances. Making an arrangement with your lender as early as possible will help prevent the foreclosure of your property. Lenders are always willing to help their borrowers especially when your financial setback is only temporary. You can also ask for a longer repayment term to lower your monthly dues. In case you and your mortgage lender do not come into terms you can always ask for the help of a housing counseling agency to help you negotiate with your mortgage term.

Get help from debt relief services

Another self help debt management plan that you can consider is to ask the help of professionals such as credit counseling organizations that can help you manage your debts by making a debt management plan and proper budgeting. Credit counseling agencies can also help you consolidate your debts whenever you have many debts to pay off.

Irina Webandyou is a finance advisor for Logbook Loan. She writes articles about finance, business and debt consolidation.