Personal Debt Management - Essay Example

Personal Debt Management I have accrued debts not because I am reckless or careless but because of changes in situations which have prompted me to take credit from various people and organizations. Circumstances in my life and changes in events have made me accrue debts failure to which I would be suffering or not be comfortable in my daily life activities. For example, I had to take a college loan in order to get my degree, failure to which I would not have been educated. Prior to having a debt repayment plan I thought I would be abler to pay all the debts on time without a strategy, but this was not the case because the debts were piling up and interest raised to unexpected amounts and this prompted me to have a debt repayment plan.

It has helped me in keeping my expenditures and incomes in line, and I have reduced the amount I borrow and spend to pay for my necessities. Prior to having a debt management plan I would receive calls from my debtors every time because I was not able to make timely repayments and this would really disturb me since I had not learnt how to manage my finances. I would have my credit cards rejected when paying for food and other necessities, and this was because managing my finances was a hard task.

The debt management plan has enabled me to manage my finances and now I can live comfortably knowing that all my debts will be paid on time without having to bring me discomforts and disappointments (Garman & Forgue, 2011).Currently I have debts from 3 sources, and they are my college loan, which amounts to $18,000, rent money, which amounts to $3000 and a medical bill of $500. To see that I ensure that my debt management plan gets me out of debt I actively engage in behavioral steps, which will see me out of debt.

The first step I will undertake is to figure out my spending patterns and eliminate the unnecessary expenses which are bound to increase my debts. I will write down every expense regardless of how small it is, and this will help me in identifying my fixed and variable costs. After this, I will tally the expenses with my income, and this will be helpful in curbing my expenses since i will be able to eliminate the unnecessary costs. The next step will be to consider the amount I get from boosting my income through other income generating activities, and this will help me in knowing my surplus.

The next step I will take is to make a list of all my debts and the interests they accrue, and this will help me in lightening my load debt.To practically implement this, I will use the basics of debt reduction, which is to minimize variable spending and take the extra money to pay my debts, which will be deducted from my credit card (Rose, 2007). Once I have determined the surplus or the money I can pay out, I will pay the debt that accrues the highest interest loan, which is the college loan in my case (Goodman & Westrom, 2010).

Once the debt that accrued the highest interest rate is paid I will move to the next debt with the second highest interest rate, and this way I will be able to manage my debts without any inconveniences to myself and to my debtors. I will also ensure that I read my monthly statements to ensure that all debts are paid accordingly without failure.ReferencesGarman, E. T. & Forgue, R. (2011). Personal Finance. Mason, OH: Cengage Learning.Goodman, J. E. & Westrom, B. (2010). Master Your Debt: Slash Your Monthly Payments and Become Debt Free.

New Jersey: John Wiley & Sons.Rose, L. (2007). Winning the War against Debt: Managing Your Personal Finances to Eliminate Debt. Springville, UT: Cedar Fort,