Debt, regardless of how big or small, must be managed effectively. For dealing with smaller debts, all you must do is keep up with your payments to prevent them from getting out of hand. However, if you are buried by too much debt, you must prioritize getting out from under it.
Knowing how much is owed
Start by creating a list of your debts, using your credit statements as a guide. This list should include the total amount of your debt, the amount owed to your creditors, as well as monthly payments and due dates. It can be referred to frequently, especially when paying bills. Update the list every few weeks, as the amount of your debt will often change.
Timely payment of the bills
Paying your bills at the last minute can make it more difficult to pay off debts since you run the risk of incurring late fees. Consider using a calendar system on your computer along or other digital devices. You simply enter your payment due dates, and the system will alert you a few days before the payment needs to be made. If you fail to make a payment, do not wait for the next due date. This will most often cause your bill to be sent to collections. Instead, send the payment as soon as you are able to.
At least make minimum payments
If you are unable to pay off the entire debt, try to pay the bare minimum installment at least. Obviously, the minimum payment does little to help overall growth when it comes to paying off your debt. However, it stops it from increasing any further. When your payment schedule is unorganized, debt becomes harder to manage, which may eventually cause your accounts to slip into default.
Decide which debts need to be paid first
Credit card debt should always be your top priority. Begin with the card that has the highest interest rate since it costs you more money in the long-term. Use the debt list mentioned above to prioritize and sort your debts according to which need to be paid first.
Pay the charges and cancellations
If you have only a small amount of debt, concentrate on keeping your other bank accounts in great shape. Never sacrifice your healthy accounts for those that are already in debt. Instead, pay your bills as soon as you can manage to do so.
Using an emergency fund account as a backup
Without an ample savings fund, you may have to incur debt to cover emergency expenses. However, having even a tiny savings account can be helpful to cover smaller expenses from time-to-time. First, try to create an emergency fund of $1,000. Once that is achieved, aim to create a larger fund, such as $2,000. Over time, you can work towards the goal of having an account that can sustain you and your family for at least 6 months.
Use a monthly financial plan to plan expense
Adhering to a detailed financial plan ensures that you will have sufficient funds to cover all your expenses each month. Plan well ahead, as this will allow you to take early action if you predict falling short on bills that month. A financial plan will also help with the appropriate allocation of any extra funds that remain after all expenses are covered; for example, using them to pay back debts faster.
Recognize the symptoms that it’s time to seek help
If you are finding it difficult to pay your bills and debt monthly, you can always seek a debt assisting company’s help. There are many other options available to depend on to help achieve financial freedom and sustainability.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
