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