Debt Management: Come Out Ahead of the Storm

Debt management takes on even greater importance with all the recent happenings in the world of business and finance. Some financial experts see what they call a "perfect economic storm" on the horizon. Those who have written on the matter in detail include Dr. Kent Gilbraith, who, in addition to serving as a forensic economist in courtrooms, is a professor of economics at the Hankamer School of Business at Baylor University, Jeremy Rifkin, who is president of the Foundation on Economic Trends, in Washington DC, and Robert Kuttner, co-founder and co-editor of The American Prospect. Consumer debt, the sub-prime mortgage difficulties, and the housing correction are just a few of the factors coming together to indicate that now is a good time for the average person to focus on debt management so that he is able to withstand, even come out ahead of, the storm.

Assess The Situation

Now is the time to assess the situation, both in terms of the big picture and on an individual level. Understand that lending practices can be expected to tighten up a bit in the near future as lenders struggle to absorb losses and find liquid funds, meaning cash, to work with. Interest rates have on the rise, and that increase has already been significant enough to many who have taken on ARMs, adjustable rate mortgages, a bit uncomfortable.

Understanding the big picture makes it easier to plan personal debt management. With a potentially difficult fiscal period ahead, it's important to make an accurate assessment of individual financial standing and debt obligations. It's the first step in making the right moves to bring debt under control.

Take Debt Management Action

It's a good time to be proactive on debt management. If you have an ARM, prepare. If running the numbers indicates that an interest increase is going to be a hardship, don't wait until the last minute to try and refinance to a fixed rate or to start setting aside savings specifically earmarked for the increased per month payment that will result from a change in the interest rate. It is still possible to find good refinancing opportunities, although it may take a bit more of an investment of your time and effort.

If you're carrying serious credit card debt, make paying it down a goal. Credit counseling can help, though the savvy and inspired individual can typically do for himself most of what a credit counselor can - negotiate with creditors about interest rates and repayment amounts, set up a realistic repayment schedule, and create a workable budget. In some situations, those actions combined with a debt consolidation loan can make a difficult financial situation much simpler to deal with.

Taking debt management steps now can help to ensure that if a few storm clouds do happen to appear on your fiscal landscape, you are able to better able to withstand them. Acting now to begin managing debt and improving credit is simply a smart move.