Auburn, Alabama — As severe drought continues in Alabama, many farmers feel added stress and anxiety about their financial future.
“Learning positive money management techniques can help farmers and their families adapt to tough economic times,” says Rick Zapata, a regional Alabama Extension agent in Family Resource Management & Workforce Development.
“Debt management involves developing one or more strategies that help a debtor get debt under control,” Zapata said.
Debt Management Strategies
Shopping for a lower interest rate on your debt can be a good option if it substantially reduces your monthly payments and the refinancing is not too costly. Try to roll higher-cost debts into a lower-cost loan.
Zapata added “If you can’t pay your bills, prioritize your debt. Keeping a roof over your head is most critical. Keep up with car or farm equipment payments if you need that transportation to stay in business. Maintain payments to as many creditors as possible.”
If you make a late payment or miss a payment, contact the creditor as soon as possible to work out a plan for getting back on track.
Contact the National Foundation of Credit Counseling (www.nfcc.org or 1-800-388-2227) for help finding a reputable credit counseling service. These organizations can work with you to develop a repayment plan and also provide financial management education.
Access to credit may be helpful in tight times. It allows you to manage unforeseen expenses such as an emergency home or car repair. Be sure to evaluate how using credit now will affect your budget in the future. With a good credit history, you may be able to work with existing lenders to lower your interest rate and negotiate better terms for existing loans.
When you receive gifts of money, get a bonus or pay off a debt, use the extra money to pay down your debt.
Make certain you get any available perks associated with your credit cards. These include credit toward payments, points toward frequent flyer miles or other gifts.
“For loans secured with a mortgage or lien, creditors can forego a certain amount of payments or accept interest only payments. It is up to the creditor but they have the ability to do this within the loan, Zapata added. Communicating with the creditor as early as possible is important. It may not work if you are already behind on the loan payments. They can add the payments to the end of the loan period and may forego penalties for late payments.
Featured photo by garagestock at Shutterstock.com