Have you ever thought what would be the consequence of uncontrolled expenditure? While the desire to purchase continues to be unsatisfied, the income base gives up much earlier. The result is debts. Debts up to a certain level are admissible. Debts need to be managed to keep them within this level. The process involving the use of several techniques to curb the amount of debts is known as debt management.

Outside agencies may not always be the ones who carry out debt management. In fact, the first step towards debt management, i.e. accepting that debts are a menace, is taken by the borrower himself. This is an important step because no amount of debt management tips will be little helpful if the borrower does not have enough motivation to bring about a change in his financial situation.

Debt management help, for debts on a smaller scale require more participation of the individual himself. For debts that are not large and where the step is more of a preventive nature, debt management will include suggesting tips. One or two face-to-face sessions is what will be required. Along with the suggestions, debt management agencies will also tell about the problems that the individuals will face while incorporating the debt management tips. The individual himself has to employ the debt management tips. All the debt management agency would do is provide a helping hand whenever the individual falters.

Debt management on a smaller scale is known as debt counselling. The tips that are offered to curb the debts form a part of the ancient wisdom that is handed from generation to generation. The idea is to remind individuals of the knowledge. The following constitute the major debt management techniques adopted at this stage:

• There must be a restricted expenditure proportionately to the income.
• If possible, individuals must try to augment their income to suffice the additional expenses.
• If a debt is incurred, it must be repaid or proper preparations must be made for its repayment.

These and several other debt management tips will be offered to help bring about a real change in debt scenario. This will require patience and perseverance on the part of the borrower. Debt counselling can be a long drawn process. However, instead of creating cosmetic changes or a temporary healing of the debts as in debt consolidation loans and mortgages, debt counselling has a long-term effect on the individual's debt scenario.

Nevertheless, the importance of debt consolidation loans and mortgages as a debt management tool cannot be discounted. When standing on the edge of bankruptcy, it will be imperative to clear the huge mound of debts already incurred. Once the finances regain health, only then should debt counselling be practiced. Situations like the one discussed above require an instant solution to debts and not a protracted one. Debt consolidation loans ensure the fastest release from the debts.

Debt consolidation loan is a personal loan that is employed to settle the debts. For the purpose of ease in settlement, all debts taken from several lenders are consolidated. The total of the debts is the correct measure of the amount of debt consolidation loan that must be drawn. The entire debt consolidation loan may not be consumed by the debts. It depends on the way debt settlement is negotiated. This is the reason why it is very necessary to engage the services of a proper debt consolidation agency. One of the principal distinguishing features of debt consolidation loans is that the loan provider helps in the settlement of debts. There is an active participation of the loan provider. In this method of debt management, the role of borrower ends once he presents the list of debts to be settled.

Debt consolidation mortgages, another popular debt management tool, is a second mortgage that includes certain debts in an existing mortgage. As in a debt consolidation loan, the borrowers will not be helped in settlement of debts. However, the advantage of this method is that debts are settled at the rate of a mortgage. Home equity loans also offer this advantage to the borrowers even though help from the loan provider may be absent.

Whatever be the method of debt management adopted, it must be effective towards debts. The ultimate aim of debt management must be to find a long lasting solution for debts. This can be brought about only by increasing awareness for the bad effects of debts and taking the necessary steps to curb them.