Five Steps For Managing Your Debt With Ease
/Everyone who owes money has to manage their debt. If you have smaller debts, you have to keep up your payments and stop it from spiraling out of control. If you owe a larger amount, you have to put more effort into paying off your debt while juggling payments on the debts you can’t currently pay.
Here are five steps to help you manage your debt.
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Know who and how much you owe. If you’re going to get your finances back on track, start by making a list of all your creditors, your total amount of debt, monthly payments, interest rates, and due dates. Use your credit report to confirm your debts. Having your debts all listed allows you to see the bigger picture and be aware of the scope of your debt. Don’t make the list and forget about it. Refer to it regularly and update it as the total amount of your debt changes.
Pay your bills on time each month. Late payments make it harder to pay off your debt, as you’ll also owe a late fee. Missing multiple payments cause your interest rate and finance charges to increase. Use a calendar on our phone or computer, and enter your payments there. Set an alert to remind you a few days before you payment is due. If you miss a payment, don’t just wait until the next payment is due. This could be reported to the credit bureau, and skip tracing can be used to find you if you ignore demands for payments. If you missed a payment, pay it as soon as you realize. If you know you can’t make a payment, alert your creditor so you can agree on a new date.
Create a monthly bill payment calendar. Use a bill payment calendar to help you work out which bills should be paid with your next paycheque. On the calendar, write the amount of each bill on the due date. Write on the dates you get paid. If you are paid on the same date every month, you can use the same calendar each month. If your pay dates are on different days of the month, you’ll need a calendar for each month.
Make at least the minimum payment. If you can’t afford to pay any more, pay at least the minimum. The minimum payment won’t help you to make much progress on clearing your debt, but it does keep your account in good standing and avoids late fees. When you miss payments, it becomes much harder to catch up.
Decide which debts to pay off first. Paying off any credit card debt first is usually the best course of action. This is because credit cards usually have the highest interest rates. If you have multiple cards, concentrate on the one with the highest interest rate first. Use your list of debts to prioritize your debts in the order that you want to pa them. You could choose the highest interest rates or the lowest balance to pay off first. For a step by step approach on how to prioritize which debt to pay off first, read this article.
