If you’re like many Americans, you may be paying off multiple loans and credit cards while also trying to keep up with utility bills, insurance costs and other everyday expenses. With so many different due dates and payment amounts, staying on top of monthly bills can be challenging. But it’s important to remember that even one missed payment can have a negative impact on your credit score
Here are some tips for jugging multiple expenses so you don’t fall behind on your payments:
1. Set Up Payment Reminders
See if your bank or service provider has automated emails or notifications that you can opt into to remind you when your bills are coming due. Even if your providers do not offer these types of alerts, you can always set your own reminders for bill due dates using your smartphone or email calendar. When setting reminders, just be sure to choose a time you know you won’t be busy, so you can make the payment as soon as you get the notification.
Another option is to use an online bill pay service through your bank. Bill pay allows you to set up and pre-schedule your payments on a recurring basis, and the funds are automatically withdrawn from your account on the due date. If you decide to use an online bill pay service, just remember that you will need to have enough funds available in your account to cover all scheduled withdrawals.
2. Consolidate Your Debt and Pay Down Your Debit
As you pay off your loans and credit cards, you’ll have fewer bills to keep track of each month. If you have multiple high-interest credit cards with balances, you may consider consolidating that debt into a single, lower-interest payment. This can be achieved by transferring credit card balances to a low or no-interest credit card or taking out a loan to pay off the cards. This can make it easier to manage your debt payments and ultimately pay everything off.
Some other methods to help accelerate debt repayment include:
• Snowball Method: Make the minimum monthly payment for each loan and credit card you have, and then apply any extra funds in your budget towards the smallest debt balance. Once you have paid it in full, direct all extra income towards the next loan or card until you have paid them all in full.
• Avalanche Method: Apply the same strategy as above, except direct your extra funds towards the loan or credit card with the highest interest rate, instead of the one with the smallest balance. Once that is paid off, move on to the loan or card with the next highest rate and continue from there.
Paying off debt is not always easy, but it is a smart move for your financial future. In order to get those extra funds to put toward debt repayment, you might consider taking on extra hours at work, picking up a side job, or cutting out some of your smaller expenses.
3. Make a Budget and Stick to It
Creating a budget is one of the easiest ways to keep track of your expenses, save money, and ensure that you have enough available funds in your account to pay your monthly bills. A budget will allow you to see where your money is going and can help you identity and eliminate unnecessary purchases. The first step in preparing a budget is to determine your net income after taxes each month.
Next, create a list of your monthly expenses and categorize them. One list should include fixed expenses that remain the same each month, such as your rent or mortgage, while the second list will include variable expenses that change monthly, such as the amount you spend on food. Pay attention to whether you are earning more than you spend or spending more than you earn. If you spend more than you earn, you’re only going to keep piling on debt. You can break that cycle by making a budget and sticking to it.
4. Consider Separate Bank Accounts
Some people find that having all of their spending money in a single bank account is not helpful. It can be tempting to see the funds there if you lack the financial discipline to know that you need to save a certain amount to put towards bills. Setting up a dedicated account for your recurring bills, and keeping those funds separate from your discretionary spending money could help combat this.
Sticking to a plan when paying off debt and managing your other expenses can ultimately help you reach your financial goals. By taking the time to understand your monthly cash flow and establish a budget, you’ll not only have an easier time paying your bills on time, but you’ll allow yourself to save money, climb out of debt, and improve your credit score.
BankFive is ready to help in every aspect of your financial wellbeing. If you’d like more information on personal loans or debt consolidation, or if you’re interested in opening a new checking or savings account to help reach your financial goals, contact us today.