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How Digital Solutions Incorporate Solvency In Debt Management ?

Posted by : Premraj | Posted on : Wednesday, January 8, 2014

Digital Influence in Debt Management

Paying off debt is a huge fiscal responsibility and studies have shown that psychological conditions like depression and neurosis are more common in people who have debt. The average U.S. household credit card debt last year was $15,279. In 2008, it was $8,329. Most of the debt comprises of mortgage payments, which stands at $149,456. This is an increase of 12.3% from 2012.

An important analysis of both the reports is that there is a need to utilize tools of debt management. Apart from financially insecure individuals, there are people who have the potential to pay debt, but fall ill to improper strategies.

Digital Influence in Debt Management

A startling statistic is that 57% of households do not have an appropriate budgeting strategy. This is clear cut ‘cause and effect’ with respect to debt. Lack of professionalism and not utilizing widely available resources puts a lot of individuals in financially tricky circumstances.

The modern era is of smartphones as there is ‘an app for everything’.  And when it comes to finance and budget management, there are loads of options available. The major convenience is that it is easy to track expenses on the go. While some apps may not be a replacement for professional software solution, they can help in creating simple monthly budget strategies.

The modern era is also largely based in the realm of ‘freeware’ (free software), which can assist in debt management at no direct cost to the user. Software related to personal finances have a major impact on how cash flows appear at the end of the month. Not only do they give options for money tracking, but also serve as a ‘spending guide’ by notifying the user upon reaching preset limits/triggers.

Both software and apps allow users to gain finance intelligence as they assist in analysis of data and present tailor made solutions. For example, after the analysis is made, they would allow cash inflows to be distributed in a manner that makes debt management a whole lot easier.

Financial literacy also plays a major role, whether a professional resource is handling the client portfolio or an IT tool is used. According to Cavalry Portfolio Services, companies can purchase sub-performing, performing and charged-off debt of consumers from creditors, but clients are often not aware about such options because of inadequate financial knowledge.

The isolated approach to debt management has failed in recent times and a survey on financial literacy even makes a very strong case against it. As per the report, two in five U.S. adults confess that they have very limited knowledge of personal finance. These are the very individuals who have tough time tackling debt. More than 41% of the surveyed individuals agree with the fact that that they had used online tools and it had helped them in fiscal matters.

Now that the case for usage of IT tools in personal finance has been made, the next step is to decide the ‘relevance’. Novices in digital era would find that there is a horde of applications and software that help in personal finances.

In this case, the selection can be based on features which allow maximization of budgeting options. The tools and solutions should have the following features:

Income and Expense Sheet, Budgeting and Budget Reports, Financial Information Security, Data Export Options, Easy to Use, Interconnectivity and Scalability.

All that being said, a lot of mismanagement can be avoided and debt management can be made a lot easier through digital solutions.

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