How to prepare debt management plans 

Debt management plans are essential at all levels: personal, household, enterprise and institutions including government. Since we are in a personal finance site, we will deal with debt management plans at the personal and household level.

Take the following steps:

1. Declare a war with debt addiction. Admit that you have a problem. Freedom from debt addiction is a complete lifestyle change. Change your motivation from a life of material pleasures to a life towards character building. It needs discipline and spiritual conviction.
2. Start implementing lifestyle changes. There are many ways to live frugal yet smart lives. Manage your spending by preparing a spending plan and adhering to it. Refer to gnmagazine site for a sample budget worksheet. 
3. Make a list of your debts putting on top of the list, debt with the highest interest payment. I have a sample template in coming up with the list which will be made available once download feature of the site is in place. 
4. Prepare a debt repayment plan. Settle highest interest debt first and good debts last. Debts for housing and education are considered good debts while credit card debts for consumer items are considered bad debts. 
5. Set aside a significant portion of your savings funds for debt. As a general rule, financial experts suggest that total debt payments should not exceed 36% of gross income so you will still have something to build your emergency fund. An emergency fund is a necessity since you will never know when emergency situations arise. 

We should not follow the bad example set by governments, where spending is financed by debts. That's why many governments are in financial mess because of poor financial management- spending money they do not have. In fact, governments should prepare their own debt management plans instead of borrowing again to pay for existing debts.

Personal debt management is just a microcosm of debt management at institutional and government levels. Personal or household debt is much easier to handle because it involves direct decision, a personal choice.  

Proverbs 22:7 of the Bible says that "the rich rules over the poor, and the borrower is servant of the lender". If you are a servant, you are subject to someone else. In effect, you do not have freedom. It affects your dignity. 

One of my favorite books in the Bible, Ecclesiastes gave profound explanation on our lifestyle and spending behavior. Ecclesiastes 4:4-6 says,

"I have also learned why people worked so hard to succeed. It is because they envy the things their neighbors have. But it is useless. It is like chasing the wind"

"They say that a man would be a fool to fold his hands and let himself starve to death. Maybe so, but it is better to have only a little, with peace of mind, than to be busy all the time with both hands, trying to catch the wind"

True enough!

Learn about money management, debt managementdebt management plans by attending Wealth Academy seminars in various locations.