If you are struggling to pay your bills each month, and you are worried about having your debt escalate because of this struggle, doing some number crunching and changing some habits may be in need to see if you can turn around your financial situation. Often people will look at the big picture and feel helpless. There are small tasks you can do, however, to whittle away at the debt responsibly so it disappears altogether. Here are some tips to use when you feel as if your debt will never be absolved.
Temporarily Drop Non-Essentials
Dropping things you do not need to survive will allow you to use the money you had paid for them to pay off any debt you have with interest rates. Knowing that giving up these things is only temporary while you make an attempt to regain control of your finances will make it a bit easier overall. Turn off your cable, drop your morning coffee runs, and ditch the gym membership. You may be surprised to see how much money you tie up a month on things you really do not need.
Know Your Debt Amount
After you have dropped non-essentials from your monthly bills, list the rest of your bills on a piece of paper chronologically according to the date the bill is due. Put down the minimum amount you must pay to avoid late fees. Add up these amounts so you know exactly how much you are responsible for paying in a month's time. Add up your income to make sure it is larger than the monthly expense amount.
If you are making less than you owe, you must get an additional source of income right away to avoid having debt escalate from large interest rates. Start selling items, offer to walk neighbors' dogs, or pick up a part-time job to help. If your debt is way out of your reach after looking at the numbers, you may want to call a debt consolidation service to help keep you from needing to file for bankruptcy.
Deal with Creditors
Call your credit card companies to ask if you can have a lower interest rate. Many times loyal customers will be given the chance at a lower interest rate if you ask. If not, consider paying off credit cards with higher interest rates by applying for a new credit card with no finance charges for at least a year.
Since the interest rate will go up after the year, make sure you will be able to pay a substantial portion of what you owe before this deadline. You will then be able to apply for another card and transfer the balance once again. This is a tactic people use to avoid having debt escalate due to finance charges. You need to be diligent in making your payments so you will be accepted for another card when the time comes.
Call creditors without interest rates, such as a medical bills, to see if they can place you on a payment plan. This will allow you the time to pay off the debt without the risk of ruining your credit for not paying the full amount on time. For assistance, talk to a bankruptcy attorney like Gruber & Associates, PC.