A debt management program is an excellent way to get rid of all your debt troubles. A debt management plan is an agreement between a creditor and a debtor that contains the terms of debt. The purpose of the agreement is to reduce debts and to help the debtor to gain financial control over a short period. It also helps creditors receive the full amount of money they are owed. Debt management plans are used when the debtor has a low financial capability and can only manage to pay a small amount monthly or make the repayment in a couple of months.
How to come up with your debt management plan
1. Get a record of your expenses and income
Gather all the credit card statements, receipts, bank statements and bills and estimate your monthly budget. Join personal finance software like Mint, AceMoney, and BudgetPulse. Or you can just create a spreadsheet. You could chart your income and expenses. A spreadsheet allows you to identify problems in your spending habits. Come up with a document containing your budget for the past one year Analyze your monthly budget
2. Create your budget
Make a preliminary budget. Set goals on how to spend Maximize on tax advantages.
3. Be a budget pro
Reduce your expenses and stick to your budget. Make a point of paying off your credit card balances monthly.
Debt Management Programs
Debt management programs take 3-5 years and require a lot of commitment. If you don’t complete your term, you risk losing the concessions made by the creditors. While in the program, all credit card accounts are to remain closed. You must ensure that you contact your creditors and establish if they have accepted your payment plan as proposed by your credit counseling agency.
It is important that you spend an hour with a counselor prior signing up for any debt management plan as they will offer you expert advice. They will advise on how to control your spending and to how to reduce your debt, and you will be given your new customized budget according to your particular situation and spending rate.
In conclusion, participating in a Debt Management Plan is the right way to go when you have an outstanding debt and bad spending habits. Credit counseling organizations will offer you all the help you need and give you counseling sessions. When looking for a credit counseling organization, go for one that has a little monthly maintenance fee and a one-time fee. You could carry out research on debt management organizations and find one that suits you.