After the financial hardships of the past year that have affected millions of people across the country, many are working hard to manage their debt. With unprecedented job losses during the 2020 pandemic, many people have relied on credit to make ends meet. While this may have been a fortunate rescue at the time, it has left many with a sizable balloon of debt.
Living with considerable debt can feel like a dark cloud hovering over your head constantly. The stress of trying to avoid calls from creditors alone is enough to add pressure to anyone. However, being proactive and planning to contact your creditors through an Intelius directory can put you on the road to managing your debt.
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While it may be tempting to ignore your debt, the fact is that reality will eventually catch up to you. Meeting your financial obligations head-on is the best way to start making a dent in your debt. So let’s take a closer look at a few ways that you can take command of your debt.
1. Know What You Owe
Before you can make a solid plan for managing your debt, you need to have a clear picture of everything you owe. It’s a good idea to create a list of all of your creditors, how much you owe, the number of your payments and the cost of your interest payments. Once you have your debts laid out, it’s easier to come up with a plan for the quickest repayment.
One way to obtain the records of your debts is to get a copy of your full credit report. All of your outstanding debts will be listed on your report. Take some time to ensure that every tradeline on your report is correct. It is not unusual for errors or past paid debts to show up on your credit report and affect your score.
When you create a list of your debts, you will better understand how to prioritize your payments. As you make payments, you can update your list for your reference.
2. Pay Your Bills On Time
The most obvious way to avoid getting into trouble with your debt is to make all of your payments on time. While this may seem like a workable system, there is more behind the idea than simply paying on time.
When you miss a payment, you will often be subject to a fee that will be added to your principal amount. In addition, if you were to miss two payments or more, it could result in your interest rates being increased, making it more expensive to pay down your original debt. Though it may take some time, making all of your payments on time will eventually help you to manage and bring down your debt.
3. Create a Budget
A great way to better view your finances is to create a simple budget. Always include all of your payments on your budget and list your income. This will help you to break down what payments are the highest priority. If you find yourself with too much debt overwhelming you, it’s a good idea to set some limits to your budget. You may have to buckle down for a few months and keep your payments to a minimum. Giving up some non-essential things in your life like magazine subscriptions, expensive cable packages and dining out can help you funnel more money towards your debt.
Creating a bill payment calendar can help you to stay on target with your debt budget. Using a manual or digital calendar, make a note of when each of your payments is due. This will help you to avoid any missed payments that could result in extra fees. Using your digital calendar, you can set automatic reminders for yourself a few days before each payment is due so that you can budget each of your paychecks.
5. Minimum Payments
When you are trying to pay down your debt, you may only be able to afford to make the minimum payment. While this is fine, it’s not a solution that will help you to pay off your debts quickly. If you want to bring down your debts, it’s always a good idea to pay more than your minimum payments. Even if it is just a few dollars over your minimum, it will make a difference in the end. You can try splitting your payments up into weekly segments so that you are more easily able to add more to your payment.
6. Prioritize Your Debts
When you make a list of your debts, the second step should be to list them in the order of priority. Your mortgage should be at the top of your list. You always want to ensure that your housing bill is the first thing to be paid. After your housing costs, you should make a list of your priorities. Essential bills like insurance, car payments and utilities should be more of a priority than non-essentials like cable television packages.
You can also take a look at which of your payments has the highest interest rates. These debts are sometimes the hardest ones to make a dent in, even when you are making regular payments. Higher interest charges equal higher overall debt, so it’s a good idea to prioritize paying those debts as quickly as possible, or you can start paying off your lowest debts first to help stabilize your credit to debt ratio.
If you have delinquent accounts that have been sent to collections, it’s essential to give these your attention. When your debts are moved to a collection agent, it has a negative effect on your credit rating. However, you may only be able to pay off the debts that you can afford at any moment.
Keeping this in mind, accounts that are in collections have already affected your credit and shouldn’t be prioritized over others that are still in good standing. If there is a choice between making a payment on time and putting that money towards a collections account, you should always attempt to maintain your debts that are still in good standing. You can pay your collections accounts when you have the money.
8. Emergency Fund
The most common cause of financial trouble is when people experience a costly emergency like a vehicle breakdown or an unexpected medical bill. When you are living on a budget, any financial surprises can be devastating if you have limited savings. Once you have begun to manage and pay down your debt, it’s time to start creating an emergency fund. Putting aside a small amount of money each week can be a life-saver if you ever need cash in a hurry.
9. Get Help
Millions of people have found themselves swimming in the red of their own finances. One of the most important factors is recognizing when you are in over your head. If you feel overwhelmed by your financial situation, you can get the help you need from a credit advisor. They can help you to make a plan for repayment of your debt. Your advisor may suggest a consolidation loan, discuss bankruptcy options or debt settlement.
This article originally appeared on ArrestYourDebt.com and was syndicated by MediaFeed.org.
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