How to Prioritize Your Bills
Bill payments come around like clockwork. From the mortgage or rent payment at the start of each month to the telephone bill every 30 days, regular expenses are unavoidable and you have to find a way to pay them. The key to paying your bills on time and avoiding late fees is to prioritize your expenses and create an effective plan of action. Here are some tips on how to pay off your bills and manage everyday expenses efficiently and effectively.
Why Pay Bills on Time?
Businesses provide a wide range of services that require immediate, periodic or monthly payment from the consumers utilizing them. When a debtor or consumer fails to repay a creditor or business, they risk incurring late fees, jeopardizing the availability of the service in question – as well as their relationship with the service provider – and in many cases, receiving negative information on their consumer credit report. So whether you’re dealing with your credit card company or your local gas and electric company, you want to pay your bills on time every time.
The Prioritization Process
The first step in prioritizing your bills is determining the amount of money you owe and to whom you owe it (and when). To get started, you will need to clear out every cabinet, desk drawer or large box in which your bills are stored. Then, you must put all your bills in order by creditor name. This will allow you to accurately assess the number of creditors you have and services for which you are currently paying. Next, you will want to take inventory of each bill, indicating which bills are current and which are past due. Place the “past-due” bills at the top of the stack, as these could be costing you dearly in late or nonpayment fees and negative points on your credit report.
Prioritizing Credit Card Bills
When prioritizing credit card bills and setting up a plan to pay them, remember that it is a good idea to pay off the credit card with the highest interest rate first, and the rest in descending order. This strategy will save you money in late fees and immediately free up money in interest charges. If you are struggling amid a large pile of debt, plan to pay as high above the minimum payment every month as possible. This strategy is also useful in dealing with a high gas and electric bill or past-due phone bill.
Obtain Outside Help
If you are in the grips of financial hardship and you cannot pay your bills, continue to make arrangements and keep your creditors abreast of the situation. This is especially true if you find yourself unable to pay a creditor on time. Rather than skipping a bill or assigning it a lower priority, contact the creditor and ask for additional time to repay the bill. Many companies offer one-time courtesy payment extensions and other support services, but you must act fast to be able to take advantage of these options.