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Debt Management |
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Debt or loans is like a double edged sword. Use it well and you can multiply your wealth. Debt or loans are just a call away but beware… they can crush you, they can kill you and they can take you down all the way! You dare misuse loans and it can finish you. Debt, loans or leveraging is one of the most powerful ways to success & prosperity but it can also be a sure-shot recipe for doom, gloom and disaster. In our view debt is the most easily available source of funds for every one of us but one needs tread with caution and astute management to make the most out of debt. ► Debt - The Advantage Creator ► Comprehensive Debt Management Banks and other lending companies want us to take as much as much debt as possible; that’s how their business works. Whether it’s a credit card, home loan, personal loan or anything else they want us to use their money and then charge us interest. The interest we pay is their profit. When the falling interest rate scenario prevails we even have pre-approved loans coming into our inbox and mailbox. Debt or loans are good instruments per se and their value depends on the need for which it is acquired. Debt can be used to unlock profitable opportunities. If companies can do it all the time so can individuals. The value of debt also depends on the existing opportunities to earn or based on a predicted fund flow the ability to repay it on time. Debt is a part of the economy and we have examples of companies taking loans all the time for expansion. They ensure timely payment at the same time availing maximum benefit of such loans to achieve their objective.
All the same debt is like a double edged sword, if used smartly it can mean lots of profits and if abused it can make you sell your house and all other belongings. We also see many companies & individual failing completely due to pressure of loan repayments. Debt is not bad what mars it is bad management. By the very nature of what ill managed debt can do is enough justification to manage it right and systematically. Failure on any front could lead to mounting dues and interest charges that deplete not only the capital but also all that one has created over years. Finances when well planned will not destine a person to such a debilitating state of affairs where his capital starts eroding at a faster rate then he can replenish it – in other words a debt trap. Sooner or later the debt overwhelms the individual to bankruptcy.
Debt management can be offered per se by anyone. However it is nothing but experience and wisdom that will in the true sense help some manage debt properly. The solution is not always to pay off everything or to borrow at lower cost and pay off higher cost loans or to prepay or any combination of the above. It’s much more than that. The approach must be scientific along with wisdom to ensure that the debt works for the individual and not the other way round where the individual works for the debt. A guideline for debt management can be as follows;
Debt management cannot be a standard defined service and the solution for each situation can be quite different. |
