Debt Management Tips – Professional Services Vs DIY Financial Management

Becoming debt-free has become very important now more than ever. The economic downturn has hit everyone in the country and the rest of the world. Interest rates are skyrocketing and loans are becoming a pain to get. If you get caught in a debt cycle, chances are you’ll end up spiraling down to even more financial problems.

Don’t lose sleep thinking about your finances just yet. There is still something you can do to manage your funds and get your finances back into shape.

There are only two ways you can go about this: bring in the assistance of a professional company or work your way out of this mess yourself. The decision is really up to you, but make sure your choice meets your needs.

Need a Hand with That? Managing Debt with the Experts

Before you commit to a company or program for debt management, remember that a good credit counselor should be able to help you create a sound budget instead of forcing you to enter a debt management program. Thorough background checks and researching is the key to finding a godsend company that will rescue you from financial troubles.

More importantly, you don’t want to be defrauded. You already have worrisome financial issues at hand. Look for accredited, licensed companies, but understand that accreditation is no guarantee that they’re as competent as they claim. You still need to snoop around and do background checks.

Find out how their programs work. Sometimes, these debt management companies use the terms debt management, debt negotiation, and debt consolidation interchangeably in the hope of confusing potential customers. Don’t be deceived by marketing corporate babble. Investigate about their programs some more, and look for customer testimonials and reviews to see what previous customers experienced.

How to Gain Freedom from Debt by Yourself

Why pay for professionals when you can manage your finances by yourself, right? Well, yes, that’s true. However, before you tackle your debts head on, remember that there are effective and not-so-effective ways to go about this. Read on for the more effective steps.

First off, make a list of all your debts and put the one with the highest interest rate at the very top. You want to pay these debts starting from the top of the list so you can pay the most expensive first. Your extra money should go to the bill at the very top. It will take some time before you can see results. Remember that with this method, becoming completely debt-free is a gradual process.

If you prefer quick results or if you’re the type who likes instant gratification, the method above will only frustrate you. Instead, make a list of your debts and sort them from smallest to largest without thinking about interest rates. Make minimum payments for every bill and use all your extra funds to pay the smallest debt. This way, you will pay off everything quickly and see results fast.

When Do You Need Help from Professionals?

Managing money yourself isn’t easy. Sometimes, you may be tempted to spend your cash on something else when you have dues to pay. If you find it hard to manage your funds or if you tend to forget to pay even if you have money, that’s when you may need the experts.

Debt Management Tips For Consumers

Money management and debt management can be handled poorly or well. Those who handle their money and their debt poorly are doomed to struggle with paying bills, and with getting out from under debt that is more than they bargained for.

Those who handle their money and their debt well enjoy stability and a sense of security. Regardless of where you are right now, you can always improve your money and debt management skills.

If you are starting from the bottom, you can look forward to seeing improvements and feeling more secure. If you are already at the top, there’s still room for improvement and added stability. Let’s look at some excellent debt management tips that everyone can use:

1.) Keep track of your money and your spending. Know how much money you have and how much your expected income is. Know what you’re paying out every month in expenses and how much is left over. You can track your money very simply in a notebook or by using one of the money budgeting programs on your computer or that you can find online.

2.) Pay your credit card charges off every month. This eliminates interest, thus saving you money. If you can’t fully pay off your credit card charges, then put the credit cards away (far away) until you can.

3.) If you’ve got a lot of unpaid debts, prioritize them and get to work at paying them off. Call your creditors and see if you can negotiate a lower interest rate and some payment arrangements that will help you get control of your debts.

If you can’t pay them all at once because you’re in over your head, consider working with a reputable debt consolidation organization that may be able to consolidate your debt into one monthly payment, and pay off your creditors. If nothing else, talk to your creditors and see how they can help you.

4.) Save money. Before you do anything else, save some of your income. If you’re completely strapped right now, take one dollar out of your paycheck and put it away (preferably in a savings account). Don’t touch your savings.

5.) If you are considering using a credit card to buy something, don’t do it unless you have the cash to pay for it first. Sound silly? This is just a good way to make sure you’re not spending beyond your means. You might not actually have that much cash on hand, but you should have a fair amount of back up cash if you’re planning on using credit.

6.) Use automated payments to pay your debts. Most creditors accept automated payments and love them because they know they will be getting their money from you every month. Just make sure you are paying attention to your accounts, so that the money is there for them to take!

7.) Before you borrow money, shop around to find the best interest rate and best bank, credit card company or lender for your needs. Pay attention to fees that may be hidden or not so hidden that could add to your borrowed debt.

8.) Live within your means. This is the biggest debt management tip. That may mean that you have to put off a purchase, or that you can’t buy the super-cool car. That’s OK if you have financial security.