Credit & debt management may seem like an impossible accomplishment for those with high credit usage. The more money owed to creditors, the harder it is to schedule payments and get back on track. People suffering from a large amount of debt no longer have to feel like their burden will never be lifted. Any size debt can be managed with a few simple changes and help from a professional.
Typical Debt Problems
There are some typical debt problems that people face. These issues can make it even more difficult for people to get their debts paid off in a timely fashion.
A large issue with credit cards is that their due dates fall on an inconvenient date. Multiple bills due at once often means something gets left unpaid. The unpaid bill is normally in the form of a credit card or previous debt owed. By changing the due date on these bills, each person can find a payment schedule that better meets their needs and income timeframes.
Many companies charge late fees for payments not submitted on time. This can put people even further behind with more money owed. If a person knows they will be late with their payment, they can call the company to discuss their options. As long as customers attempt to contact the business about the situation, many companies will extend their grace period before late fees will be applied. They may even waive the late fee altogether.
Debt problems are not all people should focus on. Finding solutions is the better option. Numerous debt solutions are available to help people get back on track with their money.
Create A Budget
Debt sufferers should begin by creating a personal budget. This will help them to see what type of income they have coming in compared to the monthly bills being paid out. Debts should be listed in this budget as well to determine what portion of money can be spent on getting them paid. A small amount allocated to debts is better than leaving no money for payments at all.
Make The Minimum Payments
Most companies have minimum payments that must be met. People who are at least submitting these minimum amounts will typically have no trouble from the credit company. It is when the minimums are not met that creditors begin making regular calls to the customer about when payment can be expected.
Enroll In Automatic Payment Systems
Some may simply struggle with spending. People with this struggle often spend money on things they want rather than on bills they need to pay. Enrolling in automatic payment systems can help with these spending habits. It ensures the money is automatically pulled from the bank account each month so there is no chance of it being spent elsewhere.
Pay Secured Debts First
There are two main types of debts. Secured debts are those that are most important. Utility bills, mortgage payments, and auto loans fall under this category. These need to be paid first to ensure people have a car to drive, roof over their head, and lights to see. Unsecured credit refers to credit card bills and items that do not impact overall daily life. These debts are still owed and need to be paid, but they can wait until the secured debts are paid off first.
Those with more than one credit card bill or loan should consider credit consolidation. This means putting all bills together in one lump sump. Making one payment each month to creditors is often far less intimidating than having to see multiple amounts owed.
Avoid Opening New Credit Lines For Any Reason
People who already have trouble paying off existing lines of credit should avoid opening a new line at all costs. Credit scores are lowered each time a new line is opened. Getting other debts paid off should be the first priority, without any new lines on people's minds.
Speak To A Debt Management Company
After attempting and failing to manage debt alone, individuals often turn to a professional for assistance. This is an ideal solution for many because it means someone else is holding them accountable. The debt manager sits down and goes over an extensive budget that meets the customer's needs. He or she then informs the client of possible solutions that can be utilized. This may include helping to consolidate credit, setting up automatic payments, lowering interest rates, and making payments to creditors directly.
Services Provided By A Debt Management Company
Debt management companies provide several services to customers. Each service helps to keep the customer's finances in check and get debts paid off faster.
Speaking To Creditors Directly
Debt managers often speak to creditors directly. This often makes creditors feel more confident that their payments will be sent in. It may even make phone calls come in less frequently, reducing stress levels for customers.
Lowering Interest Rates
Credit card companies often have high interest rates for late payments. A customer can attempt to negotiate the rate and have it lowered, but it often does not work as intended. Debt managers responsible for getting creditors paid can negotiate the terms better. Credit companies will sometimes lower the rates since they have a better chance of getting paid with a debt manager involved.
Creating A Debt Management Plan
A Debt Management Plan can be created to help keep customers on track. The plan is a fully customized list of all debts and a strategy for getting them paid in a timely manner. Income and budgets will be listed alongside the debts owed. A timeline for paying off each one will be included.
Managing debt brought on by high credit usage does not have to be a daunting task. With a few simple changes and help from a professional, any size debt can be managed. The process may take time, but eventually these steps will lead to a reduced debt amount.