No man is an island. We all need help once-in-a-while. We’re not only referring to personal matters. We’re talking about financial matters. We reach a point where we have to buy something out of necessity, but we can’t pay in full just yet. An example of this is a home.
Now the time has come for you to repay on what you own. You must have the discipline to plan out how much you should have saved so when your time is up and you have to shell out the money you owed there and then (plus interest), you wouldn’t have a hard time doing so.
Prioritize which of the debts must be paid first. Prioritize your bills. Make a list so it would be more organized because you could see it right in front of you.
This is what you call establishing goals. Establish first what must be prioritized over those you could schedule paying some other time.
The essential debts are debts that should be on top of your list. These are
- Rent or mortgage. Of course, who in his right mind won’t pay up as soon as possible. Paying your rent or mortgage bills on time helps you have a roof over your head.
- Child support. If you don’t pay on time, there’s a possibility you can be held behind bars.
- Utility bills. As much as possible, set aside a budget on gas, heating, water, electricity or telephone when you get your paycheck. In doing so, when the bill comes, then you have something prepared.
- Car payments. This also includes car maintenance.
- Other secured loans. If you don’t repay collaterals, the creditor takes the property even without court interference.
The non-essential debts can be set aside because when these aren’t paid, they don’t have that much of a side effect. It’s a desired goal but not really a priority. The only concern that can be considered when you don’t pay non-essentials debts for a long period of time is the negative image it could project on your credit report.
- Department store and gasoline charges. Failure to pay these charges may result in losing credit card privileges. If it’s too large, you might be sued.
- Loans from friends and relatives. Morally speaking, there is an obligation to pay but sometimes since they’re family, we think that they will understand if we can’t. Check with them if you can delay the payment and ask them for how long.
- Newspaper and magazine subscriptions. Little by little, if you haven’t paid, they’ll amount to so much.
- Legal and accounting bills. If these remain unpaid after a long period of time, then that’s when you might be sued.

- Other unsecured loans. In unsecured loans, there’s no collateral for the debt. This means that the creditor can sue and then collect the debt.
Here’s the confusing part. Some of the bills border between essential and non-essential. If you let these bills defer for a long period of time, it could have consequences in your personal life.
- Auto insurance. The consequence in some states is losing your driver’s license.
- Medical insurance of bills. If you have a tainted record, you might have a hard time getting new insurance in the future.
- Credit and charge cards. If you don’t pay your bills on time, you might lose your credit privileges and would have a hard time applying for a new credit card.
Now that we laid out the groundwork on how you can prioritize which bill to pay first, we move on to having a time frame.
It’s best that you have a calendar in front of you. A palm pilot or the calendar in your Microsoft Office program will do. Mark the dates wherein you would have to pay the specific debt – be it essential or non-essential. Then what you can do is set aside the bill that is allotted for that debt.
As for the budget, prevention is always better than cure. You know how much you get in a month. That being in mind, you must allot how much percentage of your salary shall go to which. Then do your best to stick to that budget.
If this is how much you should spend for leisure, then that’s how much you should spend for leisure. If at one point, it went overboard, then there would have to be a sacrifice on another aspect, such as food. That seems off, right?
So even in budget, you must also list down which is number one for you. Have the discipline to stick to your priority, your budget and your time frame. If you succeeded, paying the bills won’t be any problem.
Article by CreditCardManual.com
Visit http://www.creditcardmanual.com/debt/ for more debt articles, over 100 loan-credit management tips, and more!


Applying for a Credit Card after Bankruptcy



Budgeting for interest rate rises
On Wednesday April 4, the Reserve Bank of Australia (RBA) decided leave the official cash rate on hold at 6.25%, saving homeowners the much anticipated 0.25% increase in variable mortgage rates. Many analysts are tipping the RBA is waiting on official March inflation rates before deciding on any increase and believe an increase is likely in May.
www.news.com.au stated that “Higher rates are forcing people into financial hardship with a survey by NEWS.com.au and Coredata released today revealing almost one in three Australians would be forced to sell their home if interest rates rose by 1 per cent.”
Furthermore, “Of property investors, 44 per cent said a 1 per cent rate rise would force them to sell their properties as mortgage costs got too much to service.”
Take the following mortgage and see what happens when interest rates increase:
Current situation
Loan amount $300,000
Interest rate 7.99%
Loan term 25 years
Weekly minimum repayment $533
Total interest payable over 25 years $394,038
0.25% interest rate rise
- Weekly minimum repayments will increase to $544
- Total interest payable over 25 years will increase to $408,441 – that’s another $14,403!
- Additional amount required per annum to satisfy minimum repayment requirements will be $598
0.50% interest rate rise
- Weekly minimum repayments will increase to $557
- Total interest payable over 25 years will increase to $423,529 – that’s another $29,491!
- Additional amount required per annum to satisfy minimum repayment requirements will be $1,202
1.00% interest rate rise
- Weekly minimum repayments will increase to $580
- Total interest payable over 25 years will increase to $454,084 – that’s another $60,046!
- Additional amount required per annum to satisfy minimum repayment requirements will be $2,424
The Sunday Herald Sun reported on April 8 that “Battling families are using their credit cards to pay their mortgages in last ditch efforts to save their homes.” reporting one family that has accumulated approximately $160,000 in credit card debt on eight credit cards and that “charities and financial counsellors say there are thousands more - many just one interest rate rise from losing their homes.”
All this talk about interest rate rises and the impact it is having on homeowners enforces the important of staying in control of your finances. Applying additional amounts to the mortgage repayments means families will need to cut back on other areas of spending to avoid the trap of financing their lives via credit cards which attract interest rates of approximately 20% p.a..
The best way to stay in control of your finances is to ensure you regularly complete a budget. Budgeting is the key to understanding how much you are spending and where you are spending your money - this is the first step to being able to save money.
By regularly completing a budget you regularly understand where and how you plan to spend your money over the coming period. That way you can determine which areas of your spending can be better managed i.e. where you can save money which can be applied to those additional mortgage repayments.
For those people who struggle with budgeting or don’t know where to start when it comes to budgeting, www.easy-budgeting.com can help.
www.easy-budgeting.com has made the process of budgeting easy and possible for everyone. The web site offers a simple and easy to use 12 month budget model created in Microsoft Excel. You don’t need to be a computer wizard or an Excel expert, you just need to have the desire to control your finances.
The main feature of the 12 month budget model provided by www.easy-budgeting.com is the ability of the user to budget an income or expense item by completing just 3 easy steps. The user simply selects the start month, the frequency and the amount of the income and/or expense and the data for the 12 months is automatically generated based on the parameters selected.
After completing the budget and reviewing the 12 month summary and the expenses graph, users can easily determine where their money is being spent and where cut backs are possible. The budgeting process will help you identify your problem areas, take control of your spending and ensure you are better prepared to manage those inevitable interest rate rises. If completed regularly, budgeting will become second nature and you’ll find that your money will go further and work harder for you and your family.
Visit www.easy-budgeting.com for more information on the 12 month budget model.
About the author
Rhys Campbell is a qualified Chartered Accountant residing in Australia, with over 16 years experience in the finance / commerce industry worldwide.