Report by Celina Jones: A debt management plan does more than reminding you that your creditors are eagerly awaiting your remittances and that your credit history might suffer if you don't pay promptly. The plan also helps you understand what it takes to improve your financial condition and prevent money-management errors that put you in the dire condition in the first place. Before developing a debt management blueprint, assess your financial condition and talk to a finance professional.
Assess Your Financial Condition
Assessing a debtor's financial condition is the cornerstone of a liability management program, the other name for debt management plan. To evaluate your financial condition, give analytical prominence to things like assets, debts, net worth, income and expense. Net worth is the number you get when you subtract all your debts from your assets. Debts - also called liabilities - include everything you owe, from credit card debt to mortgages to student loans to car debts. Assets, or personal resources, run the whole personal gamut and include mortgage-free property, retirement accounts, cash, certificates of deposit and savings accounts.
Seek Professional Guidance
After evaluating your net worth, reach out to a professional well versed in the minutiae of debt management. A certified public accountant, a tax planner or a financial adviser can help you cobble together a debt management outline that fits your personal situation. A debt-restructuring lawyer also can provide valuable insight, especially when it comes to renegotiating remittance terms with your existing lenders. If your monetary condition does not allow you to hire a debt management adviser, seek the expertise of a non-profit liability management organization. You also can contact the community college in your area and inquire whether the finance faculty offers some pro bono - that is, free - debt management advice.
Develop a Debt Management Plan
Any debt management plan requires expert advice. With the help of a financial adviser, draw up a debt management document that not only helps you get back on the financial track, but also enables you to stay economically stable in the long term. Key questions to address in the plan include how much you currently owe, how much interest you are incurring on each debt, how far behind you are in terms of payment, and how much leeway existing lenders are willing to give you so you can repay your liabilities. Creditors might agree to reduce the interest rates on specific loans, and you also may want to consolidate all your outstanding liabilities - thus paying a single lender at the end of the month.
Implement the Plan
Developing a debt administration program is good, but implementing it is even better. Identify behavioral tendencies - say, you are prone to impulsive buying even if you don't have the money - that put you in financial disarray, and rectify those tendencies. Track your expenses better by developing a periodic budget, and make sure you stick to the debt management blueprint by paying your lenders on time - lest they be unnerved and cancel the plan.
Monitoring your expenses and income can help you control your debts and assets, which in turn affect your net worth.
Assess Your Financial Condition
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| Debt Management Plan |
Seek Professional Guidance
After evaluating your net worth, reach out to a professional well versed in the minutiae of debt management. A certified public accountant, a tax planner or a financial adviser can help you cobble together a debt management outline that fits your personal situation. A debt-restructuring lawyer also can provide valuable insight, especially when it comes to renegotiating remittance terms with your existing lenders. If your monetary condition does not allow you to hire a debt management adviser, seek the expertise of a non-profit liability management organization. You also can contact the community college in your area and inquire whether the finance faculty offers some pro bono - that is, free - debt management advice.
Develop a Debt Management Plan
Any debt management plan requires expert advice. With the help of a financial adviser, draw up a debt management document that not only helps you get back on the financial track, but also enables you to stay economically stable in the long term. Key questions to address in the plan include how much you currently owe, how much interest you are incurring on each debt, how far behind you are in terms of payment, and how much leeway existing lenders are willing to give you so you can repay your liabilities. Creditors might agree to reduce the interest rates on specific loans, and you also may want to consolidate all your outstanding liabilities - thus paying a single lender at the end of the month.
Implement the Plan
Developing a debt administration program is good, but implementing it is even better. Identify behavioral tendencies - say, you are prone to impulsive buying even if you don't have the money - that put you in financial disarray, and rectify those tendencies. Track your expenses better by developing a periodic budget, and make sure you stick to the debt management blueprint by paying your lenders on time - lest they be unnerved and cancel the plan.
Monitoring your expenses and income can help you control your debts and assets, which in turn affect your net worth.
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