Being in debt can be hugely stressful, but if you are systematic about how you handle it, then you can beat it and reclaim your life. Start by making a list of all the debts you have - the amount you owe, the monthly payments, and when the debt is due. You can pull up a lot of information out of your credit report, and this will help you to confirm the debts that are on the list. By having all of them in front of you, it will be easier for you to see the big picture, and therefore keep track of how quickly they are being paid off. Keep the list updated as the amount of money that you owe goes down - this will help to motivate you, and you'll be able to see progress, and re-assess the priority of debts on the list.
Always Pay Your Bills on Time
Paying late makes it much harder to pay off any debts, because you will get hit with late fees for missed payments. Missing two payments in a row could even lead to increased interest rates and make it harder to get credit at a later date. Set up your smartphone to tell you when payments are due. Contact the creditor to make payments as soon as possible in the event that you miss one. Don't wait, and don't bury your head in the sand - because the longer you hold off, the more likely it is that you'll end up with negative marks on your credit file.
Set Up Automatic Payments if You Can
If you get paid on the 1st and 15th of each month, then use a calendar to tell you what bills you should be paying out of each of those payments. Try to map out your payment days for each month of the year, and set aside some time each pay cycle to pay all the bills that you must pay - so you know that the money you have left over is disposable income.
Create a Checklist
Work out at least the minimum payments for each debt, and pay them without fail - this will ensure that you won't default on any accounts, and that you're slowly - very slowly, chipping away at the debt. If you can afford to make more than the minimum payment, then do so - because that extra money will have a huge impact on your debts.
Figure Out What to Pay off First
Choose the highest interest rate debts, and start paying them off first. Usually this is payday loans and credit cards, but it could be other things too such as a hire purchase, or a loan that has punitive charges for late payments. Some people feel that there's more impact to paying off lowest balances first. This makes sense too because then you can tick that debt off, and put the money from it towards paying off other debts to get those cleared more quickly.
Don't Default on Good Accounts
The best way to protect your credit rating if you have already got some past due accounts is to keep the accounts that are in good standing up to date. Of course, rent, taxes and essentials such as electricity are priority debts, but if you can pay those and then you have never missed a payment on a store catalogue, keep paying that. Pay off the past-due accounts with what's left. If you're in a situation where you have defaulted with several creditors, then this may not work and you may need to reach an agreement with all of them.
Do Not Use Savings to Pay off Debts
Be wary about using savings to pay off debts. If you're facing eviction, then yes, pay the rent - but if you pay off your debts with your savings and end up with zero savings, then you'll fall into debt again as soon as another expense comes up. Try to cut your expenditure, clear your debts, and build up a small savings fund - even $1000 will help, so that you have something to fall back on.
Write a Budget
Work out what you need to pay for food, rent, travel, taxes and other expenses. Try to find ways to save money so that your income is greater than your expenditure. Put your excess income towards paying off your debts, and stick to the budget. You'll be less stressed if you do this than if you find yourself running out of money at the end of the month.
Ask for Help If you can't pay your bills, talk to a debt relief company or get help from a credit counseling agency. There are many places that offer free advice and that could save you from some very stressful situations.
You can also try consolidation too and if you’re wondering does payday loan consolidation work, then read that piece.
These tips will help with debt and help take the financial pressure off.