Improving your debt management skills
Written by admin on December 6th, 2010For many of us, dealing with debt has become part of our day-to-day lives. Most debts needn’t be a major problem, providing they are kept under control – providing you can comfortably keep up with them, and can see how you’ll pay it all back.
However, if your circumstances change and your debt becomes unmanageable, your debt management skills may be put to the test. It’s always best to be prepared and make sure they are good enough to deal with any problems that you may encounter.
Here are a few ideas on how to improve your debt management skills:
1. Understand your priorities. If your income falls and/or your expenses increase, you may find you’re unable to pay everything you should every month. Before making any decisions about this, you should assess your situation carefully and work out which of your monthly debt payments are the most important. A simple way to do this is to identify the debts that carry the most severe consequences if you fail to pay them – these are called ‘priority debts’, such as mortgages and other secured debts. Your unsecured debts, such as personal loans and credit cards, are your ‘non-priority debts’. In general, you should make sure you can afford payments to your secured debts first. This is because if you fail to repay these, you could risk serious consequences, such as having your home repossessed. If necessary, you may be able to negotiate with your non-priority lenders, asking them to accept lower payments until your circumstances improve.
• It is important to note that your other essential costs – such as food and transport costs – are also very important, so you shouldn’t neglect these.
2. Create a budget. Another way you could improve your debt management skills is by creating a budget. Doing this will help you monitor your finances closely, and may help you see where you can make cut-backs on non-essential spending to ‘free up’ money you need to put towards your debts.
3. Speak to a professional debt adviser. If you find that improving your debt management skills on your own is quite difficult, you could speak to a professional debt adviser. They should be able to offer you tips and advice on the most appropriate way for you to tackle your debts.For many of us, dealing with debt has become part of our day-to-day lives. Most debts needn’t be a major problem, providing they are kept under control – providing you can comfortably keep up with them, and can see how you’ll pay it all back.
However, if your circumstances change and your debt becomes unmanageable, your debt management skills may be put to the test. It’s always best to be prepared and make sure they are good enough to deal with any problems that you may encounter.
Here are a few ideas on how to improve your debt management skills:
1. Understand your priorities. If your income falls and/or your expenses increase, you may find you’re unable to pay everything you should every month. Before making any decisions about this, you should assess your situation carefully and work out which of your monthly debt payments are the most important. A simple way to do this is to identify the debts that carry the most severe consequences if you fail to pay them – these are called ‘priority debts’, such as mortgages and other secured debts. Your unsecured debts, such as personal loans and credit cards, are your ‘non-priority debts’. In general, you should make sure you can afford payments to your secured debts first. This is because if you fail to repay these, you could risk serious consequences, such as having your home repossessed. If necessary, you may be able to negotiate with your non-priority lenders, asking them to accept lower payments until your circumstances improve.
• It is important to note that your other essential costs – such as food and transport costs – are also very important, so you shouldn’t neglect these.
2. Create a budget. Another way you could improve your debt management skills is by creating a budget. Doing this will help you monitor your finances closely, and may help you see where you can make cut-backs on non-essential spending to ‘free up’ money you need to put towards your debts.
3. Speak to a professional debt adviser. If you find that improving your debt management skills on your own is quite difficult, you could speak to a professional debt adviser. They should be able to offer you tips and advice on the most appropriate way for you to tackle your debts.
Tags: budget, credit, credit cards, debt, everything, finance, home, income, lenders, Management, money, situation, spending, way, work
