Debt Management Plans should come hand in hand with loans and lines of credit in Australia. Entering into debt is almost unavoidable living in Australia with loans and lines of credit available through most banks and lending facilities. Borrowing money is a huge financial commitment, and if you don’t have a proper debt management plan in place, you are setting yourself up for disaster.
A debt management plan is a 7-step guide to help you repay your debts. It is a debt management worksheet that you need to do.
Step 1: Plan A Budget
‘Without a plan, you plan to fail’. Before you can get a grasp on your debts, you need to sort out your finances. The best way to do that is with a budget. Sit down, figure out how much income your household is earning, and write down all your living expenses. These include meals, entertainment, school fees, haircuts, clothes, bills, petrol and anything you regularly spend money on. Anything left over can go towards repaying your debts. A budget is a key element to your debt management plan, but you should keep a budget whether you are in debt or not. A budget is a great money management tool that you should religiously follow. So you should know other free debt management tools that you can use.
Step 2: Know Your Creditors
For your Debt Management Plan, you will need to know exactly who you owe money to and how much. Draw up a table listing your creditors, the amount you owe, and the interest rate you are paying. This will help you figure out how to divide your money.
Step 3: Devise A Strategy
You will need to figure out how to best repay your debts and incorporate it into your debt management plan. There are several repayment strategies when it comes to reducing debt. Your job now is to decide how to best allocate your available funds. You could:
* Split the available money evenly between all creditors
* Pay each creditor a percentage of the normal payment due
* Pay off more the debts with a higher interest rate
* Pay off more the smallest debts to repay them sooner and free up more funds
* Request that certain repayments be postponed for a specific period, and use the money to pay the other debts.
You could also take advantage of a free debt management program, if you know of anybody offering it. Or, you could contact Debt Rescue to help you devise a strategy for your credit card debt management.
Step 4: Contact Your Creditors
Once you have decided on a repayment strategy, you should contact each of your creditors and discuss your Debt Management Plan with them. They may try to negotiate with you to settle on a repayment plan that suits everyone involved.
Step 5: Start Repayments
Implement your debt management plan and make repayments. Ensure you pay what you promised to each creditor on time and in full. If you renege on your deal, your creditors have the right to implement recovery proceedings, which can be incredibly stressful.
Step 6: Keep In Touch
As your Debt Management Plan unfolds, keep your creditors in the loop. If your circumstances change or you feel you still can’t afford to make the repayments, your creditors should be the first people to know, not the last.
Step 7: Get Help
You don’t need to go through this alone. Debt Rescue specialises in helping clients out of bad debt. The experienced Case Managers can help you with a budget, develop and negotiate a debt management plan, keep track of your repayments and liaise with your creditors. Debt Rescue will also help you with the debt solutions that would work for you.
Starting A Debt Management Plan
If you are struggling with bad debt and want to use a debt management plan to get your debt under control, call Debt Rescue. Our Professional Case Managers specialise in reducing debt and getting people’s lives back on financial track. For help with a debt management plan or for other debt advice, call today and Talk to AN Aussie Who Cares.