Thursday, January 12, 2006

Debt management manage your debts

Debt management is to manage your debts. Debt management has become very important these days. This is mainly because of numerous people applying for loans or planning to get instant cash in some or the other way.

  1. You must try not to spend too much of money over your usual balance.

  1. Avoid the credit card usage as much as possible.

  1. Today the most basic used method of debt management is debt consolidation. Debt consolidation refers to the consolidation of one’s debt into a single account. Debt consolidation helps taking out a loan to pay off many other debts.

  1. If the debt consolidation process does not suit your condition then repaying with a windfall, if you happen to receive one, or drawing up a debt reduction plan are other alternatives to it.

  1. You must try and understand the debt to income ratio. Debt to income ratio will help you know about your financial health. This can tell you about your debt paying capacities.

  1. Learning about home equity loans is also a wonderful idea. Home equity is the difference between the unpaid balance of your mortgage amount and the fair market value of your house.

  1. There are two types of home equity loans in which either you can pick up the complete loan amount upfront and pay it back gradually in installments or you can use it as a credit line drawing money as and when you need it. The upfront home equity loans are beneficial for paying off huge debts such as medical bills, car purchase etc.


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