Here are some basic tips to help keep you on track before, during or after you’ve cleared up your debts.
Organize Your Finances:
It’s always a good idea to know exactly how much cash is coming in, how much is going out, and most especially where it’s going. Take note of all your expenses and break them down in detail as much as possible. Are you spending more of your money than you need to on something in particular? Taking a good look at everything on paper can help make sense of the bigger picture as it pertains to your finances.
Once you’ve taken a good look at where your money is going, it’s a good time to scrutinize your spending habits. Your spending is probably the main reason why you are in debt so you need to see where you can save and set a new budget to keep yourself on track.
Beware of Easy Credit:
These days people are bombarded with easy to get credit cards and various ways to borrow money. Credit companies do their best to make it as tempting as possible (that’s their business after all). Anyway you slice it, using credit means creating debt. If you don’t need a loan, don’t take it.
When you do have to use credit, make sure you have thoroughly thought about it. More importantly, you need to have a repayment plan even before you make that credit application – or at least a rough idea of how you plan to pay it back. Try to pay your bills in full and before their due date. Paying bills fully before the due date saves you money in interest and late fees, which helps you stay out of debt. Not only that, it also looks great on your credit history.
If you do start to fall behind on your payments for whatever reason, pool in your resources as best you can, then contact your creditors and let them know about your circumstances. While bill collectors may have led you to believe otherwise, most creditors will be fairly forgiving provided they know payment is coming. Whatever you do, don’t just ignore the bills you can’t afford to pay. That is never a good thing because they will just end up getting bigger, passed on to a collection agency, and damaging your credit score for years ahead.
Clean Up Any Errors in Your Credit Report:
Every now and again, even after you’ve finished cleaning up your debt, there can still be inaccuracies in your credit report. That will continue to effect your credit unless it is resolved. You have the right to obtain your credit report free of charge annually, and you can use that to sort out any faults pretty quickly once identified. Making sure everything is updated can help save money on the interest of future loans.
Once you have gotten your budget back on track, try to put away a little from each paycheck whenever possible. A little money saved up for a bad day can help keep you away from taking on new high interest loans or using other credit when funds are tight. As they say, prevention is better than cure so just be prepared for any unforeseen circumstance.