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Debt Management Wiggle Room Debt Management and Collecting Your Debts
Most of us who are very good at managing our own personal and business finances are very poor at collecting the monies that are owed to us. We really hate to find ourselves in the position of being a debt collector.
Because we take our own financial obligations seriously, we tend to think that others do the same. They don't...at least not all of them.
Everybody has at one time or another loaned friends 20 bucks and never seen a penny of it repaid yet, and most likely never will. We all know that. We knew when we made the loan that it was really a gift. Those kinds of things you simple chalk up to experience and move on.
Other loans of substantial amounts that are made to family and friends should, however, have legal documents attached to them. Asking for collateral isn't unheard of, and neither is charging interest.
Advice given by very wise people of the past tells us to simply not lend money to family or friends, and it really is excellent advice. You aren't a bank or a lending institution. You are simply very good at managing your own finances.
If lending institutions won't lend your friends and relatives money, it is for a very good reason. The institutions have information that tells them that they aren't very likely to get their money back. You won't have the information about how they have handled debt in the past or how deeply in debt they are at the present. All you are going to know is what they choose to tell you.
The best answer when friends and relatives ask you to loan them a substantial amount of money is, “NO.” But if you do decide to make the loan anyway, at least make it legal and binding with contracts, collateral, and interest.
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| Responsible Debt Management Debt Management and Home Equity Loans
Most consolidation loans are second mortgages, and second mortgages are home equity loans. When you buy a home, you usually make a fairly substantial down payment, so you start out with some equity in the home.
As the years go by and you make your monthly mortgage payments, you increase the equity that you have in the home; and when property values increase, your equity in the home increases. The equity that you have in your home represents the portion of the value of the home that actually belongs to you.
Many times when people find themselves in a financial bind, debt collectors calling and coming by, and the mailbox full of second, third, and final notices, they will look at the equity that they have accumulated in their homes and see it as a possible way out of a financial crisis. It is a possibility, of course, but it is one that needs to be well thought out before it is applied.
There are two kinds of debt. There is secured debt, which includes anything for which there is collateral. Your car is the collateral for the loan that you made to buy your car. Your house is the collateral that you used to buy your house. Your guitar and amplifier are the collateral that you used to get the loan to buy them. If you dont pay your secured loans, the lending institution can repossess the collateral that you used.
Unsecured debt is the other kind of debt. This is credit card debt. We are talking about all kinds of credit card debt. The store credit card that you used to buy your television set is unsecured debt. The television is not collateral for that loan. If you don't pay that loan, they will not repossess your television set. They can sue you for payment -- they probably won't, but they could.
When you make a second mortgage or consolidation loan, you are making all of your unsecured debt secured debt. You are using your house as the collateral. If you don't pay your second mortgage, your mortgage can be foreclosed upon and your house can be taken. |
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| Debt Management and Family Crisis Debt Management Is a Good Thing
People have dreams. Some of them dream of getting a college education, while others dream of owning their own home. Dreams are as varied as the people who dream.
Whatever the dream is, it is almost a certainty that it is going to take financial planning, and financial planning means debt management. Successful debt management means making a realistic budget, setting financial goals, achieving those financial goals, and thus achieving the dream.
Dreams don't come true by accident. You really can't have your cake and eat it, too. Choices must be made, and sometimes those choices are hard ones.
Some people see budgets as evil schemes designed for the sole purpose of making one's life miserable. Budgets are not evil schemes. Budgets are plans for making dreams come true. A budget is simply a plan for allotting income and managing debt so that goals which have been set can be achieved.
Everybody won't make the same choices when making a budget. Some people may choose to drive a car an additional year or two in order to save money for a big vacation. Others may skip vacations in order to be able to buy a new car sooner. Dreams, wants, and desires are individual things. They can't and shouldnt be determined by what others think is important.
If it matters to you, then it matters; and when you make your budget and map out your plans, remember that the plan needs to be based upon what you want to achieve. But, whatever you want and whatever your goals may be, you will need a plan to get there. Those who fail to plan, plan to fail. That's an old saying but one that is very accurate.
Maybe you have a dream, but without a financial plan, you are very unlikely to achieve it. |
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Debt Management When Starting a Business, Is Debt Consolidation Your Debt Management Answer
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