Kaboutjie SA Mommy Blogs by Lynne Huysamen
A lot of us have a very high incidence of debt and it can be potentially quite dangerous. So, how do you remove the worry? These tips are here to help.
Tip 1: Make a budget
You can manage your debt by examining what you earn, what you spend on a monthly basis, and your assets. You can write it down or use this easy to use online Budget Worksheet. Examine what you are getting and what you are spending. You may be surprised to realize that you spend is more than what you earn. This is why you need to come up with a scaled-back spending plan.
Tip 2: Negotiate after budgeting
Contact your credit companies and request for a lower interest rate. According to Money Expert, many people only call their creditors when things are falling behind.
Tip 3: Consolidate your obligations
You can manage what you owe by folding several loan and credit card bills into one loan that should be paid once a month. Debt consolidation is divided into:
Student loans
Combining student loans is something worth considering. On average a bachelor’s degree graduate has $27,000 in debt among 8 students in debt among 8 student loans. Seeking a Federal Direct Consolidation Loan can make things much easier. For more information about this, visit federal student-aid websites.
Credit cards
Transferring debt to a lower rate card can help you manage debt. There are credit cards that offer a 0 % teaser rate on balance transfers for a certain period of time.
Tip 4: Prioritize payments
Deanne Loonin of the National Law Center in Boston and author of “Guide to Surviving Debt” says that it is a good idea to focus on keeping current on secured debt obligations such as mortgages and auto loans. Prioritize debts related to necessities such as debts and utilities you cannot discharge including unpaid federal taxes and student loans.
Tip 5: Use a credit counselor
At times managing debt can be a daunting task. This is why it may be a good idea to look for a counselor to negotiate with creditors to lower rates and scrap late fees and any other penalties.
The agency will then be a consolidator whose role will be to collect a payment from the debtor and give it to creditors on a monthly basis. Nonprofit agencies who are members of the National Foundation for Credit Counselling usually charge a onetime DMP set up fee of about $30.
Most of them need a DMP maintenance fees of $20 a month. It may not be a good idea to choose for-profit debt settlement companies. According to Consumer Financial Protection Bureau, these arrangements don’t help you get better terms as it may even be better to negotiate by yourself than relying on these arrangements.
The one thing I would disagree with is the debt counselor. I work with a lot of bankruptcy attornies and, generally speaking, a debt counseling service is just delaying the inevitable. Plus, they can cause a person more late fees and penalties, and even more damage to one’s credit. It is always better to negotiate directly with a creditor. On paper, a debt counseling service sounds like it would be a good idea. But, in practice, it often doesn’t work out.
Thanks for the advice Timothy, I would think it would depend on the circumstances – but yes I am sure that doing the negotiating yourself may save you a lot on fees in the long run!