Don't despair. We have compiled some "debt-ly" questions; the answers
really are handed to keep you debt-free and alive.
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Read on.
- What is debt management?
Debt management is the ability to handle your current debt and whether you can assume further debt. Since most of us will incur debt in our lives, effective debt management is essential to a sound financial plan.
- Why is debt management critical to the financial planning process?
It is important for you to have the capacity to pay for unplanned purchases, to withstand a change in income or employment and to meet other financial goals, such as early retirement or funding your children's education. By assessing your current debt situation, you will be in a better position to assess how well you are managing your current debt and how well prepared you are to handle further debt.
- How do I determine my current debt situation?
The first step is determining how much you owe by completing the Total Debt Worksheet. These payments help determine Total Debt Service (TDS) Ratio. Financial institutions will use the TDS ratio to measure your current debt situation when assessing all credit applications. As a guideline, your Total Debt Service Ratio should be less than 40%.
- What is an emergency fund and do I really need one?
Financial Planners recommend that you save at least 3 to 6 months of your income in the event of an unplanned purchase, loss of income or major repair. Many people begin establishing an emergency fund as one of their short-term financial goals.
- I have several credit cards and difficulty meeting my monthly minimum payment obligations?
Firstly, consider some Debt Management Strategies. Secondly, you may contact a local TD Branch to consolidate your debt through a loan. Finally, if you can't pay for an item immediatly, don't buy it! Only charge what you can afford.