Informative Speech: Personal Debt Management

Student’s Name

Professor’s Name

Personal Debt Management

Date;

Personal Debt Management

Informative Speech: Personal Debt Management

Specific Purpose: To inform the audience about the importance of managing personal debts.

Thesis Statement: There are many people who are trapped in debts which they do not know how to come out of.

Organizational Pattern: Topical

Introduction

Attention Getter: Please raise your hand if you don’t know anyone who is in debt, that’s what I thought!

Relate to Audience: I am now sure that the majority of this class needs to comprehend the how to manage debts as it is something that affects many people silently.

We will start by defining Debt; Debt is a sum of money or value owed to someone else, an institution or an entity.

It is not difficult to find someone with debts in the current economy which is basically a global phenomenon. Loans help people to educate children, build homes, get capital for investment, take care of emergencies, and go for holidays among many other things. It is therefore understandable that many people have huge debts, some good debts others bad debts.  Debts can, however, bring a lot of frustrations if not well managed, in some cases depression, high blood pressure, and even death can be caused by debts.

Credibility: Being someone who has ever been in debt myself, I have also had many encounters with people who are deeply in debt and are trapped some to a bad extent.

Preview: I trust that by the time I am through here we, shall have gotten tips on how to handle debts, which we can share with other people to enable them handle their finances.  

. {First I will categorize the different types of Debts}

Categories of Debts

There are two major classifications of debts, that is good debts and bad debts and the classifications are based on the use of the debt acquired and the cost of the debts.

a) Good Debts        

Good debt is one that adds value financially or has a potential of future returns from the expenses incurred by the borrowed money. It is a debt procured for purchasing an asset or adding value whose returns are projected to be higher than the interest charged on the credit. However returns must not necessarily be monitory, it could also be social or health benefit. Below are examples of good debt; (Beard)

• Education loans.
• Mortgage or home development loan
• Loans to handle medical bills.
• Loans for constructing rental property.
• Purchasing vehicles for car hire or taxi services.
• Expansion of the business.

  b).Bad Debt`

Majority of people are buried in the bad debt category, these are debts used to buy liabilities or items that require an individual to turn to other sources of income other than what the loan was used on to pay it back. Most of the bad debts also have very high-interest rates and normally as a result of impulse acquisitions, short-term pleasures, living beyond one's means, or acquiring good debt but diverting the funds apart from a few genuine cases when the bad debts maybe necessary like in real emergencies. Some examples of bad debts are as below; (JavierAndrésa)

• Taking a loan to buy an expensive personal car which still depends on your salary to fuel and maintain.
• Another example and perhaps one of the major sources of the financial bondage of our time is the credit cards.
• Another bad idea of loans is trip loan.
• Another common mistake is to take a salary advance loan from shylocks and money brokers.
• Buying things you can’t afford on higher purchase is another way of getting bad debts, getting latest couch, TV, and others will only lead to traps furthermore those things are mostly liabilities you have to maintain.

{Now that we have looked at categories of debt, let us go through some of the ways of managing debts.}

Debt Management Strategies

i) Know Who You Owe.  

You need to know the people and institutions you owe, how much the repayments are expected when they are expected, interest rates charged, what are the remaining balances, where are those individuals or institutions located and have the information written down so that you can have a plan on how to clear them.

ii)  Budgeting

Budgeting as a strategy to reduce your debts helps you identify things which are essential to spend on, things you need to operate and just be comfortable and even in some cases you need to be a little uncomfortable to fight off the grip of debts. The budget will help you reduce on wastages are to release more cash to pay off existing debts.