Debt Management

Debt Management

A serious problem facing many college graduates today is debt management. Students who don't have scholarships or wealthy parents usually graduate with a huge mountain of student loan debt, not to mention the fact that some even graduate with credit card debt too. And during college they learn very little (if anything) about debt management. Seems a bit unfair, doesn't it? College students should be required to take a class about debt management at some point before graduation, preferably in their freshman year. If students have student loans to pay back after graduation, they obviously aren't starting out debt free, but if they learn about the evils of credit card debt early on in their college career, it could keep them from searching for free debt management later in life.

How Did I Get So Far in Debt?

It starts after graduation. First you land the "perfect" job, and even though the pay is more, your expenses go way up. After you get the job, you get your own apartment, which takes a huge chunk of your modest check each month. If you're smart, you'll also get renter's insurance to cover the costs in the event of some kind of disaster that ruins all the new furniture you bought (on credit) for the new apartment. In most cases, you need a car, and with it comes the added expense of car insurance. You may have paid that before, but now that you no longer get the benefit of your parents' multi-car discount, you might find the rates are slightly higher than what you're used to paying. You think you're all set until you get your first utility bills. Your first bills will usually include hook-up or installation charges on top of what your monthly bill is. Then there's the issue of your student loan payment, which also eats a lot of your income. In addition, you're no longer on your parents' health insurance plan, and that's a big chunk of money out of your check before it even gets to you! Before you know it, you're so low on cash that you're putting your groceries and gas on your credit card (unless you chose a high-paying profession) and in some serious need of debt help. Rather than ask your parents for help, this trend of putting groceries, clothes and entertainment on your credit cards continues, and your monthly minimum keeps creeping up. Most people let this go until it's out of control, at which point they seek help with debt management. You must learn budgeting skills in order to curb those credit card debts.

Now What?

In the past, the only option when you got to a certain low point with your finances was bankruptcy. Some people think the key to debt management is to just begin cutting back, which is a good start. Others move back home with their parents until their credit cards are paid off and they build up some savings. People in a more desperate situation may turn to debt management programs like debt settlement or debt consolidation to get their credit card bills paid off.

Debt consolidation is a good choice for you if you have a lot of credit cards with high balances and higher interest rates to match, and you don't want to declare bankruptcy. If you choose debt consolidation, you will pay only one monthly payment to the debt consolidation company, and the payment amount is usually something more affordable than what you are currently paying to all of your credit card companies. The interest rate is usually a lot lower too, and you'll make progress paying down your credit card bills. (If you only pay the required minimum on your credit cards each month, it will take many years to pay it off. Debt consolidation loans can take time too, but not nearly as long as paying just the minimum amount due on your cards.) In addition to helping you pay your debts off faster, a debt management service can teach you debt management skills. It's like the Debt Management 101 class you never had!

No matter what you decide to do, if your credit is still intact, you should keep it that way by:

• Paying your bills on time and in the correct amount
• Not opening new cards
• Making sure your credit report is correct

I'm Finally Debt Free! How Do I Stay That Way?

If you've reached the point where you're finally debt free, you've probably already learned some things about debt management along the way, especially if you got help through some kind of debt management program. If you've managed to do it on your own you need to develop a budget and stick to it, which is much easier said than done. If you choose a debt management program that includes debt counseling, you'll learn how to budget, how to use credit wisely and maybe even how to save for the future. Now you are a little older (and hopefully a lot wiser) so you know what it will cost to live on your own again, and you may have already learned what you need to live on and what you can live without. You definitely know your income level. You will still have some debt, so debt management skills will still be essential--forever. Debt management is timeless, much like the Japanese art of flower arranging.

There's nothing like the feeling of independence that comes from keeping your debt under control, and it may be the only incentive you need to be able to control your financial future. The debt management program will prove the be the perfectdebt management solution. Contact a debt management company to find out which one is right for you.

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