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How To Manage Debt And Eliminate It
By plrprousers | January 24, 2009
First of all, know for a fact that there is no one-size-fits-all answer for debt management. There is, however, a specific debt management answer for each individual and each family.
Successful debt management is built upon two factors that we all have in common; income and out-go. The bottom line on a paycheck is income and so is any interest payments made to you or any other form of income that you receive.
You should not include automatic deductions from your paycheck in your debt management plan. The out-go includes every penny that is spent, including the latte that is bought en route to the job and the cold drink that is added to the purchase when the car is refueled.
These kinds of expenditures are not debts, but they are part of the total out-go, and must be considered when making a debt management plan.
When your expenses are minused from your income, what is left is called your disposable income. If the answer is zero or less than zero, you cannot afford to take on any additional debt. You need to learn how to negotiate debts down with your creditors so you can increase your disposable income.
If there is a positive number, then this is where you get to make your own decisions about how that money will be spent. But you should work on negotiating down credit card debt so you can reduce what you owe and get out of debt faster. Cutting overall expenditures will increase this number, and adding to overall expenditures will decrease this number.
If you find that you do have disposable income, then you and your family will need to make decisions based upon your lifestyle and your interests. Maybe a family vacation is what would make all of you happy, or maybe buying a house dog would do the trick. You might not be able to afford both and you will need to choose the things that will make you and your family happy.
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