Nothing is more stressful than being behind on bills. It doesn’t really matter how you got into this predicament, it’s more important to identify the problem and fix it before you get way in over your head in late fees and accumulating interest. It’s not too late to get your financial life back on track. If you are planning to buy a home in the future, your credit will need to be in good shape to obtain a loan. Here are a few steps to help you make a plan.
Your credit score is probably one of the most important numbers in your financial life. Being late on bills or not paying them is going to adversely affect that score, and in turn, make it very difficult to obtain credit at a low-interest rate. Late payments stay on your credit report for years. You may think that it’s impossible to reverse what has already been done, but if you make a plan and have a strategy you can get back on track.
Eliminate Outstanding Debt
Getting behind on your bill payments might be something that just slowly got out of control. Paying down the debt to eventually eliminate these bills is your first plan of action. Gather all your monthly bills and look at how much you owe. Write this down on a separate piece of paper with due dates and how much you owe monthly and the total amount of the debt. You want to make a plan to pay the most on the debt that has the highest interest rate. Keep making minimum payments on the others, but focus on the biggest one. While organizing this be sure to make any late payments you have before they get out of your control.
Add up the amount of money you owe and how much is due each month. This will help you to budget your money and know exactly what’s coming in and what needs to be going out. Having a balanced budget is a good way to keep track of your expenses. If you feel that the amount that needs to go to your debt is more than you can afford, resist the urge to stop paying your bills. Find areas in your budget that can be reduced so you can focus on eliminating your debt.
Consult with Creditors
Most likely if you are late on your bills, you are receiving calls from your creditors. Once you have a strategy in place you should have more confidence to talk to the creditors and explain your situation. If you communicate your desire to make a monthly payment and show a pattern of that, along with keeping the lines of communication open, your creditors are more likely to work with you.
During this time of alleviating your debt, you will need to make sacrifices that might seem hard at the time. Keeping the long-term goal as your priority will bring your debt down more quickly, and you will ultimately have more money later on for the things you love.