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Debt Management
Many of us find ourselves in a position of limited funds and growing expenses
In today's economy,
many of us find ourselves in a position of limited funds and growing
expenses. One of the best ways to improve your financial situation is
to first take a look at your debt.
The first step is to make a list of all of the debts you owe. This
should include everything from credit cards, to cars, property and any
other loans you have taken out. Categorize your list with the following
items: item name, real (current) value, amount owed, interest rate,
monthly payment amount, maturity date.
Once you have made your list, consider if you can sell any items to
lower your debt. Items for sale need to be desirable, and the real
value must exceed the amount you owe.
Next, consider your goals for debt reduction. Is your long-term
financial health or immediate monthly cash flow more of a pressing
need?
If you are looking at long term financial health, look at your
list for those items that have the highest interest rates. These should
be the ones you target first. Consider the maturity dates as well. Many
loans use double-declining interest, and if you have been paying on
them for more than half of the loan term, your actual monthly interest
paid might be less.
If your bigger concern is monthly cash flow, look
at the monthly payment amount and the amount owed. Find the item that
has the smallest amount owed but the largest monthly payment. This
should be your first debt to target.
In either circumstance, with one debt to target first, make a plan to
eliminate it. If you have savings, it often makes sense to pay it all
off now. If not, see if you can at least double your payment until it
is gone.
Once that debt is gone, simply work on the others until they have been
whittled down as much as possible. And, don't add to your debt! In today's economy, many of us find ourselves in a position of limited
funds and growing expenses. One of the best ways to improve your
financial sit...
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Date Added: 2009-08-19 Views : 216
