Drawing Up A Debt Management Plan

Instead of hiding from phone calls or ignoring the post

, it is possible to take control and DO SOMETHING ABOUT IT!

The first step is to draw up a debt management plan. Many debt management companies advise this approach or offer this service. There are some debt management companies who, for a fee, offer to deal with your creditors for you; some of them - such as Consumer Credit Counselling Services or Christians Against Poverty - will do this for you for free.

However, it is entirely possible for you to start to deal with your finances yourself, by, for example, contacting your creditors, asking them to freeze any interest and to offer them a reasonable monthly re-payment. It all begins though, with a debt management plan or DMP.

A debt management plan demonstrates to your creditors or debt management companies that you have started to address your finances. A DMP can also form the basis of an interesting experiment for you: To begin with, write down a list of all your monthly income and expenditure. Some of your expenditure will be fixed - such as subscriptions or direct debits to utility companies. Certain categories - such as food, drink and entertainment, you may initially have to guess. Next, draw up a weekly plan of how much you spend - and be sure to include everything: that sneaky glass of wine, the newspaper and cup of coffee whilst you were waiting for a friend, that late lunch. Not only will you see how your estimated monthly outgoings compares against your actual (4 times) weekly outgoings, you may also notice patterns of spending or frivolities that could be curbed: If I used a flask and had packed lunches, then I could save X pounds a week...

Most debt management plans cover the following, so be sure to include these when drawing up your income and expenditure list:

Utilities (water, gas, electric), council tax, rent or mortgage, broadband, mobile phone bill, travel, food and drink, entertainment, tobacco, media, clothes, other credit.

It would be wise for you to also have a sundries column, that way you can make a note of how much you spend on luxuries as well as keeping an eye on any savings that you could make with regard to food, drink, entertaining, or indeed any of the other categories.

by: rhinoaus

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