How to Create a Debt Management Program that’s Successful
In order to get out of debt and stay that way, you’re going to need a debt management program that will enable this. A successful debt management plan is only part of the solution – you’ll have to stick to it in order to receive the results that you want. Some people try to create debt management programs on their own, while others hire a professional financial advisor to assist them. You can find a debt counselor who will help you with this by going to a non-profit agency, which is recommended because they aren’t driven by profit. Once you have a debt program in order, you may want to have a counselor or advisor who can help you through the process until you have eliminate all or most of your debt. Staying on track can get pretty tough, so the extra motivation could definitely help.
Setting a Realistic Budget
Ever debt management program should have a realistic budget set for the consumer. If you decide to hire a financial advisor, he or she will be able to help you come up with an ideal budget. The calculation is pretty simple – you will need to add together all of your expenses and all of your household income, then subtract the expenses from your income. Then the process of shaving off unnecessary debts, like hair stylists, movie theaters and eating out, will need to be done.
Finding the Right Debt Relief Option
The next step of your debt management program will consist of determining which debt relief option is the best for your situation. If after you have created a budget, you find that you’re unable to pay on all of your debts, you’ll need to fit in a solution that will help to lower your monthly payments. Some companies will only work with consumers who have a certain amount of debt. You can hire a debt counselor who can negotiate a lower interest rate on your behalf and help to eliminate your late payment fees.
Another option is to use debt settlement services, which will have a debt counselor who will call up all of your creditors and negotiate a settlement price for all of your debts. This will require you to pay the debt upfront, instead of in monthly payments. This is a good option if you have a lot of smaller debts that can be cut down to an affordable rate.
Always Provide Accurate Information
If you’re working with a financial advisor or counselor for your debt management program, it can be tempting to leave out debt information to make the process smoother. You’ll end up with a payment plan that is lower, but it won’t solve your debt problem, since your other debts will still be accumulating each month. On the other hand, don’t give false details that will boost the amount of income that your household brings in. This could put you in a tight position where you’re unable to pay for the monthly payments that your debt management plan has set up.
In fact, it’s a good idea to place all of your unsecured debts into this program, so that it will decrease them and halt the debt accumulation process that credit cards are known to have.
Setting a Payment Date
The date you choose to make payments to all of your creditors shouldn’t fall on or near a time when you have other bills to pay. You want to make sure that you’ll be able to make the payment on time and doesn’t interfere with the other bills that you have. You’ll be required to make a payment every 30 days, so make sure you stay on the ball or you could lose trust from your creditors once again.
Starting Your Debt Management Program
Once you have everything in order, you can begin making payments each month to your creditors. The credit counselor that you worked with should provide you with a report that showcases your debts and how much is left on the balances. This will act as a monthly statement that will help you to stay on track. Seeing your progress will also keep your motivated to continue your program. Also, this report will help the counselor to investigate payments that were sent, but not reported. It’s important that all of your payments are accounted for. Make sure to keep evidence of all payments you’ve made. It’s best to use checks or debit cards because they are recorded transactions. If you use cash, buy a money order and save the receipt.
The great thing about these programs is that it can be revised to fit your changing life.