Debt. It’s a word that strikes fear into hearts and makes stomachs drop each time the postman shows up. So what if you could turn your financial missteps into yesterday’s news?
You can! With an effective debt management plan in place, all those worries go away. You won’t have to be overcome with anxiety each time you visit the bank, and soon you’ll be well on your way to being completely debt-free.
One of the first things to consider when creating a debt management plan is to take a proper look at monthly expenses and what your priority debts are. If not repaying a debt can negatively impact your life, then it is considered a priority debt. These include household bills and mortgage payments. When you’ve sorted those, turn to the non-priority debts and determine which ones you can repay monthly with little stress.
When you weigh your income as it relates to your monthly expenses and debt repayment needs, you’ll be able to see where you can cut more corners in order to save. Instead of getting takeaway five times a week, cut it down to two, or ignore those expensive leather boots, in favour of what’s on sale. As you compartmentalise your priorities, you’ll see very clearly where you can make dents in your debts. Find out more about making an effective debt management plan work for you and what it entails.
Though in some cases debt repayment agreements with creditors are set in stone, there are many financial institutions that are willing to work with you based on what you’re able to pay. With your clear budget in hand, you can better figure out a reasonable repayment plan that respects creditors’ leniency, and allows you some wriggle room. Note that these agreements are often voluntary for creditors, so in these cases, as long as you uphold your end of the bargain, all should be well.
In the same vein, you can apply for or request extended payment terms for unsecured debts. The ability to pay off debts for an extended period, gives you more peace of mind. You can live your life without the feeling of dread breathing down your neck, as you know you have more time to rid yourself of the financial burden. Choose monthly automatic payments so you don’t even think about that money before it goes where it’s meant to.
Another option you could have for effective debt management is reduced or eliminated interest. These little perks can lead to you paying your debt off sooner. With reduced costs your monthly payments also go down and if your creditors agree to such a payment structure, both parties benefit.
At first it may seem difficult wrapping your head around the changes that will be required to really stick to your debt management plan. Keep at it and as you chip away in the red, soon you’ll be sipping from the cup of financial freedom in the black.