3559: Are You in Debt? 6 Reasons You Need A Debt Management Plan by Courtney Luke of Arrest Your Debt

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[00:00:52] This is Optimal Finance Daily. Are You In Debt? 6 Reasons You Need A Debt Management Plan by Courtney Luke of ArrestYourDebt.com Debt can be a reoccurring nightmare for those struggling to manage their money. If left unchecked, it may take forever to shed it off your back. However, there are some types of debt like mortgages that are a gateway for accumulating wealth and building financial health.

[00:01:19] In the same vein, when you pile up debts in such a way that you end up juggling bills haphazardly, it may take ages before you find your way to financial freedom. Rather than worrying about your financial life, it's time to do something about it. If push comes to shove, you can seek the input of credit counseling organizations and other professionals who create debt management plans. Debt Management Businesses

[00:01:47] While some organizations offer pro bono services, others render their services at a fee. These organizations are often a reprieve for people who have been held hostage by unsecured loans. Their primary role is to come up with debt management plans, tailored specifically to each client. If you opt to use a debt management plan, you'll work out how to repay your debts and avoid the likelihood of defaulting or declaring bankruptcy.

[00:02:17] Perhaps you're wondering what a debt management plan is. In layman's terms, it's a payment schedule developed and managed by a credit counseling agency. The agency will go a step further and educate you on how to manage your finances effortlessly. When you enlist the services of a credit counseling agency, you'll be assigned a counselor who will assess your financial situation.

[00:02:42] He or she will furnish you with the most viable options of how you can achieve financial wellness. Generally, a debt management plan is home to a wide range of benefits if your debt never seems to go away. A plan tailored specifically to you will set you on a path of paying off your debts. Benefits of a debt management plan Here are some of the top benefits of having a debt management plan tailored specifically to your situation.

[00:03:11] Number one, sound advice. Before you start following a debt management plan, the credit counseling agency will put you through a financial counseling session. Here, a financial analyst will review your budget, debts, and options to help you determine the best way forward. Whether or not you opt to go with their plan, the initial session, free or paid, may turn out to be helpful. Number two, alleviation of late fees.

[00:03:41] If you've been struggling with debt for any length of time, your past due balances may have caught up with you, even if you're in a position to make monthly payments. Such a scenario is better solved if you have a solid financial plan at your disposal. Since this happens often, it's not uncommon for your creditors to agree to update your credit account status to current if you can show them you have a plan going forward.

[00:04:06] Nevertheless, you'll be required to remit several on-time payments before the creditor eliminates any incurred penalties. Number three, clearance of debt before the set deadline. If your financial counselor is doing their job, he or she should persuade your creditors to lower the interest rates attached to your debts. As you continue to make monthly payments, a larger portion of this money will clear the principal balance.

[00:04:34] By lowering interest rates and focusing on paying off one debt at a time, the time it takes to get out of debt will be significantly decreased. Number four, fewer harassing calls. The moment your creditors get wind of how you intend to repay your debt, thanks in part to your debt management plan, they'll do away with the frustrating calls. In some instances, these calls may keep coming for several months since there's a lot of paperwork involved.

[00:05:03] However, the longer you stick with the plan, the less your creditors will harass you. Number five, accountability. In the absence of a plan, you run the risk of struggling with debt with no end in sight. But with a comprehensive plan, accountability will creep in. With the help of your credit counselor, you'll devise a plan for repaying your debt, and they'll walk with you until you're debt-free. And number six, increases your credibility.

[00:05:33] The process of clearing your financial debts is tiring, and it can put you under stress. This anxiety is often the case if the creditors are hot on your heels. When you're in this position, the last thing you want is to be on your mortgage creditor's speed dial. Therefore, the agency you've enlisted to develop a debt plan should address any issues that may arise with your lenders. Legally speaking, your creditors reserve the right to contact you,

[00:06:00] but you can direct such calls to your credit counseling agency. In essence, if you consider a debt management plan as a viable option, you should reach out to a certified credit counseling agency. While some agencies are non-profits, others will require you to part with some money before they get down to work. By and large, a debt management plan should be your first plan of action as you obtain sound financial advice on how you can pay off your creditors.

[00:06:28] Don't let debts drive you crazy. Speak out. You just listened to the post titled, Are You In Debt? Six Reasons You Need a Debt Management Plan by Courtney Luke of ArrestYourDebt.com Summer's almost here, and honestly, I want to be planning a vacation, not stressing about whether I can actually afford it. That's why I keep my finances organized with Monarch,

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[00:07:26] I can ask the AI assistant, can I afford this vacation without touching savings? And get a real answer. Use code OPTIMAL at Monarch.com to get your first year half off at just $50. That's 50% off your first year at Monarch.com with code OPTIMAL. Dell PCs with Intel inside are built for the moments that matter. For the moments you plan and the ones you don't.

[00:07:55] Built for the busy days that turn into all-night study sessions. The moment you're working from a cafe and realize every outlet's taken. The times you're deep in your flow and the absolute last thing you need is an auto-update throwing off your momentum. That's why Dell builds tech that adapts to the way you actually work. Built with long-lasting batteries so you're not scrambling for the closest outlet. And built-in intelligence that makes updates around your schedule not in the middle of it.

[00:08:25] They don't build tech for tech's sake. They build it for you. Find technology built for the way you work at dell.com slash dellpcs. Built for you. I think it's great that these kinds of services are available to get people out of debt. And what stuck out to me about this article is how accountability with another person is sometimes all you need to keep you on track. I did this with a friend last year.

[00:08:54] We spent about an hour coming up with a budget, looking at her outstanding debt, and developing a debt repayment plan. And we have regular check-ins to talk about how she's tracking against her budget and celebrate the progress that she's making towards paying off her debt. We developed her debt payoff plan with a debt reduction calculator, and there are many free ones available online. What was great about this calculator is we simply entered in all the debts, interest rates, minimum payments,

[00:09:22] and total amount she has available to throw at her debt each month. And the calculator does the work of plotting out the monthly payments based on the paydown strategy, which could be the avalanche method or snowball method. The avalanche method is fastest as you're paying off the highest interest debt first, but the snowball method can be helpful if you need some quick wins to strengthen your commitment to paying off debt. You can absolutely do what's described

[00:09:51] in this article on your own, but it could be a more enjoyable process with a cheerleader by your side. So in addition to exploring your options with nonprofits and a debt management plan, consider if you have a friend in your life that might be able to offer some accountability. And that should do it for today. Have a happy rest of your day, and I'll see you on the Friday show tomorrow, where your optimal life awaits. All right. Thank you.