Light, water, financing, credit card. After all, which accounts should we prioritize when we are unable to settle all our debts? In general people have different ways of determining this
It is normal to select the most expensive, or with higher interest. But when some of these debts involve essential services or goods it can be tricky to choose.
Which bills should I pay first?
The first step is to prioritize debts in the following order:
- Essential services (water, electricity, gas) and housing;
- Debts involving assets, such as vehicle financing or secured loans;
- Higher interest (credit card and overdraft);
- Debts that may negate your name, such as store credit;
- Debts with friends and family.
Of course, each one must observe their situation to follow their own prioritization.
Don’t forget to pay the bills
Not everyone gets negative because they failed to pay an account for lack of resources. There are cases where the consumer simply forgets about the debt and ends up spending the money and then cannot settle the debt.
A very effective way to prevent this from happening is to leave as many accounts as possible on direct debit, but there are also other tips that can help:
- Put all your accounts in an electronic calendar synchronized with your mobile phone. This will alert you and ensure payment is made to maturity;
- Use spreadsheets and write down what has already been paid;
- Use the automatic debit option;
- Share the responsibility with someone else. It is possible that in a given month you will have unforeseen events and end up leaving either account unpaid. If someone else helps you with this control, it will be easier not to fall into default;
- Pay the bills as soon as you receive. This prevents money from being spent and accounts being left open.
Cutting spending is key to getting out of this moment. Don’t make unnecessary purchases and consider lowering your standard of living until everything is right. Avoid eating in restaurants, lower your internet and phone plan, cut pay TV. Everything that is not essential must be removed.
Selling goods can also be a good deal. Sell your car or, if it is badly needed, replace it with a simpler model.
The financial educator Katharine Monday was at Legendary and explained how she managed to get out of debt from over $ 80,000 to become an investor. Check-out:
Consolidate Your Debts
Debt consolidation is a proven technique for eliminating debts on a scheduled basis with a lower value. It is divided into four steps:
- Know how much you owe: add the value of all debts;
- Negotiate: contact your creditors and make a proposal for cash payment;
- Make a loan with low interest on debt value;
- Pay the installments on time.
You will pay fixed and scheduled installments and save good money on interest.
Finally, be careful never to find yourself in this situation again and keep saving. How about at the end of the loan keep saving the value of the installments and create an emergency fund?