Do you have tough financial times? Do you have troubles paying bills? Are you receiving overdue bills from you creditors? Well, in this case you should learn how to manage your debts.
Almost every person faces difficult financial problems some time in their lives. Quite often when you find yourself between jobs, you do not get salary but the bills still keep coming and you have to pay them. Sometimes, no matter how greatly you try, you simply cannot get the money you are obliged to pay off. In the following situation you do not even have enough money to pay main living expenses and to pay off you debts to your creditors.
If you find yourself in the situation when your income is quite reduced, you have to change your spending habits for this period of time. The quicker you do it, the sooner your financial situation will change. Your family should be in touch with the occurred situation and take an active part in the decision process and problem solution. By getting a powerful encouragement from your family, you will carry out all your plans and soon after you will resolve all financial problems.
Evaluate your financial situation. The first and the most important thing to do is to evaluate your financial situation rationally. Take a sober view on your problems and get yourself in hand. If the bills go beyond the money you have at your disposal, it is better to contact them and explain the occurred situation. Usually creditors compromise in order to adjust all the payments because they need their money back. But before contacting your creditors, you need to pay attention to some important questions. Firstly, you should calculate very carefully your monthly income in order to understand how much money you have at your disposal for covering basic living expenses and how much money are left for resolving your financial problems. Secondly, work out a table of the owed debts that contains the names of all your creditors, interest rates and the total amount you owe them. By means of this table you can get a clear picture of how much money you owe. Thirdly, think about your present financial situation and try to suggest for how long it is likely to last. It is important to do this for the purpose of drawing your personal crisis management plan and to pay off all your debts as quickly as possible. Fourthly, make a list of items and unnecessary things that could be sold and used to pay off the debts.
Define the priority of payments. At this stage it is important to define what debts are the most important to be paid first. Of course you are obliged to pay all of your debts, but you can choose the priority of these payments. Sit down and think carefully how much to pay and to which creditors. There are two methods of resolving this dilemma. The first method is to divide available money in equal shares between all your creditors. And the second one is to assign priorities which creditors get the most money. In this instance you should think carefully and define which debts would lead to negative consequences for you and your family if they are not paid at the proper time. The first bills on your priority list are the ones that affect your family’s health and public utilities: medical insurance, food, rent or mortgage bills, house utilities such as heat, power, phone, car payments or transportation, taxes, etc. So first of all you should pay priority bills or contact your creditors in order to divide the payments into smaller ones.
Check your credit contract in order to find out which of your debts are secured and which are not. Though you have to pay all your debts, the unsecured ones may have a lower priority, such as credit card debts, doctor and attorney bills, various accounts with merchants, etc. The creditors of unsecured debts usually do not remind you about the payments for a long time, especially if earlier you have paid your bills in time.
You should always remember about your credit record. If you do not pay your bills, this will be recorded on your credit record and in future you will definitely have problems with getting a credit. That is why it is very important to contact all your creditors immediately if you feel you have financial problems and you cannot pay all the bills in time. Remember that if you have a possibility to pay at least something on each of your debt, it is less likely that this will be recorded in your credit record.
Develop your own repayment plan. Once you have evaluated your financial situation, calculated how much money you have to spend for monthly living expenses and paying your secured debts, you should determine how much you can pay to every creditor basing on the priority of payments you have defined earlier. Develop your own repayment plan that will show the presumable sum you want to pay to each creditor. This plan should not be nominal; you should accurately follow it in order to get out of debts as quicker as possible and to make the payments you promised. Do not forget to contact you creditors and inform them about your financial problems and the ways of resolving them. Try to meet your new commitments very carefully, so far as the creditors can hire a collection agency in order to make you pay.
It is very important to remember that no matter how complicated your financial situation is, you do not have to ignore your bills and creditors. Pretending that everything is fine and you have no problems at all will not make the debts go away. Keep your family members informed about all your steps, discuss all the expenses and this will definitely help you to make your repayment plan effective and smooth. Promptly you will forget about all your debts and get back to a normal life.
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