| Debt management as the name suggests is all | | | | - If the debt consolidation process does not |
| about ways and means to manage your debts. | | | | suit your condition then repaying with a |
| Debt management has become very important | | | | windfall, if you happen to receive one, or |
| these days when people are reeling under huge | | | | drawing up a debt reduction plan are other |
| debts. This is mainly because of numerous | | | | alternatives to it. |
| people applying for loans or planning to get | | | | |
| instant cash in some or the other way. As | | | | - You must try and understand the debt to |
| both personal and corporate debt levels are | | | | income ratio. Debt to income ratio will help |
| increasing each day, bankruptcy too is | | | | you know about your financial health. This |
| becoming a very common phenomenon. | | | | can tell you about your debt paying |
| | | | capacities. With little intelligence the |
| However there are several ways to debt | | | | individual borrowers can calculate this ratio |
| management. | | | | for themselves. The main point of concern in |
| | | | calculating this ratio is to find out how |
| - At first you must try not to spend too much | | | | much of your monthly income is available to |
| of money over your usual balance. | | | | meet a monthly debt obligation after paying |
| | | | off all regular fixed monthly expenses. |
| - Secondly avoid the credit card usage as | | | | |
| much as possible. If you are badly in need of | | | | - Learning about home equity loans is also a |
| a credit card, opt for one that has minimum | | | | wonderful idea. Home equity is the difference |
| interest rates. | | | | between the unpaid balance of your mortgage |
| | | | amount and the fair market value of your |
| - Nowadays the most basic and widely used | | | | house. Home equity loans can be effective in |
| method of debt management is debt | | | | paying off your debts because of their lower |
| consolidation. Debt consolidation refers to | | | | interest rates and tax benefits. A home |
| the consolidation of one's debt into a single | | | | equity loan is ideal if you have to meet |
| account. Debt consolidation helps taking out | | | | timely expenses such as college tuition fees, |
| a loan to pay off many other debts. | | | | installments of you car, refrigerator, |
| Consolidation companies such as ABSA, Ned | | | | electricity bills etc. |
| bank, Old Mutual Bank, First National Bank | | | | |
| etc. usually offer debt consolidation loans. | | | | There are two types of home equity loans in |
| Since the debt consolidation loans form a | | | | which either you can pick up the complete |
| part of home loan they are offered at low | | | | loan amount upfront and pay it back gradually |
| interest rates. As a result more and more | | | | in installments or you can use it as a credit |
| people are attracted towards these loans. | | | | line drawing money as and when you need it. |
| | | | The upfront home equity loans are beneficial |
| But the fact is that loan consolidation too | | | | for paying off huge debts such as medical |
| comes at a price. Though it may relieve you | | | | bills, car purchase etc. |
| of your repayment amount and terms yet | | | | |
| finally you end up paying more by way of | | | | - However auto loan, subsidized student loan |
| interest rates or service charges. So you | | | | etc. are other cheaper options available. |
| should always think before going for debt | | | | |
| consolidation. | | | | Mansi gupta recommends that you visit Debt |
| | | | Management for more information. |