Debt Management - Designing an Effective Plan for Debt Management
BY MELANIE WALTERS

If you are struggling with debt management and unable to get your finances in order, perhaps a more thought out plan is required. Taking the time to sit down and examine your income and expenses, needs as opposed to desires, and requirements rather than wishes, can be an extremely financially rewarding experience. Much debt is caused by bad personal spending habits, overindulgence, and susceptibility to marketing ploys. Debt management plans may require a little sacrifice and discipline, but if you stay the course the end result will be a happier, less stressed, and wealthier you. Let's take a look at how you can become debt free and financially sound by designing and following an effective plan of debt management.

Debt Management Plan Step 1

The first thing you'll want to do when designing a debt management program is to truthfully determine how much you currently owe. Be honest with yourself, as overlooking any debt will only cause you more hardship in the future. Ignoring unpaid bills will result in more liability, as service and penalty charges or interest can mount up extremely fast. Once you have that figure, you can begin to compile a list of your monthly expenditures; you'll be surprised what you may be able to eliminate, turning a negative equity into a positive one.

Debt Management Plan Step 2

Compiling an accurate list of your monthly expenses is a critical step in your debt management program. You may not realize how much expenditure you may be able to either reduce or completely eliminate until having it in front of you in black and white. Once you've compiled your list of expenses, take a look at what you might be able to eradicate. Are you a smoker? If you smoke a pack a day at $5 a pack, that could be turned into a savings of $35 a week, or $1820 per year. Drink? Say you go out on Friday and Saturday nights. The average person might spend $20 or $30 each night on food and drink, totalling $160 - $240 per month. Going out on only one of those nights instead of both could save a further $80 or $120 per month, or $960 - $1440 per year.

Debt Management Plan Step 3

The third step of your debt management program simply involves applying the savings you acquired through the elimination of unnecessary expenses in step 2 to the balance of your credit computed in step 1. This may sound too simple and straightforward to be effective, but if you are honest about the amount you owe, and make the sacrifices required to eliminate nonessentials, you can begin to eliminate your debt almost immediately.

If the thought of forming your own debt management program overwhelms you, then consultation with a professional debt management team may better suit you. There are many companies that specialize in debt management. They are experienced in handling a plethora of personal circumstances, and will be more than happy to assist you in developing a debt management scheme that will satisfy both you and your creditors.