How to Catch Up on Late Payments

Are you falling behind on your bills? It happens to everybody from time to time. In many cases, it’s just a little hiccup – like forgetting that your electric bill is due on the 18^th and not the 20^th.  Whoops!

Then again, some dues can really get out of hand. Like if you haven’t paid your credit card bill in six months or if you have medical bills that are far beyond your ability to repay them.

Some people struggling with late dues try to do their best by making the minimum payments on their debt. While this is well intentioned, it won’t actually do you much good. Minimum payments are calculated by lenders and creditors to maximize the amount of interest earned – or in other words, the max amount of money they can squeeze from you in the long run. This problem is compounded if you are still charging things to your credit card which you are laboring to pay off.

These realizations can be frustrating. But don’t lose heart. There are strategies you can employ to catch up on late payments.

Prioritize Payments, One Way or Another

Some financial experts like to point to the “debt avalanche method” to pay down late bills. This tactic targets a single debt (also known as a focal debt) based on the highest interest rate; while encouraging the debtor to pay the minimum owed on their other debts.

Why is this helpful? Since debt avalanching takes on high-interest loans first, you end up saving more money in the long run. So, if you have a credit card charging 20-percent interest, a car loan charging 10-percent interest, and another loan charging just 5-percent interest, it only makes sense to work your way from top to bottom – like an avalanche.

“Debt snowballing,” on the other hand, employs a different strategy entirely. Just like how a snowball rolling downhill accumulates size, debt snowballing starts small and ends big. In other words, start by paying off your small debts – like that $180 cleaning fee on your last apartment or the $200 debt on your credit card. Your larger debts can wait because they are so big, it’s not like they can disappear quickly anyway.

The idea is to prevent forgetting smaller debts and letting them fester. Plus, it feels good to accomplish things, even if it’s just a little at a time. By the time you approach your bigger debts, you already have momentum and a taste for success.

In the end, it doesn’t really matter which strategy you employ. The goal is to tackle your late payments by any means you are willing to take.

Consider Debt Consolidation

Are your financial obligations getting out of hand? Are your dues and late payments so large that you are scratching your head trying to figure out how you could ever pay them off? This is not a comfortable position to be in, but it happens.

In cases like these, many people find support in debt settlement. Debt settlement companies like Freedom Debt Relief help debtors by negotiating down the total amount owed on their debts. This moves the finish line closer, thus making it easier to get out of debt. Believe it or not, creditors and lenders agree to forgiving a portion of your debts in exchange for a promise that the rest of the debt be paid. In a way, it’s a win-win for debtors and creditors since both are getting what they want – a path to satisfaction.

Similarly, other folks prefer to leverage debt consolidation. When you have a little debt here, a little debt there, and a lot of debt over there, it’s all too easy to lose track and fall behind. Debt consolidation companies, like Consolidation Plus, provide debtors loans that cover all outstanding debt under one umbrella, so to speak. Debtors then pay off one easy-to-manage loan rather than try to chase down various dues and late payments all over the place.

Again, either strategy can work. So, it really depends on your situation. Start by investigating various reputable debt relief companies to see what best matches your goals and priorities.

The Spartan Budget

Ancient Greece had two cultural focal points – Athens and Sparta. While Athens was known as the center of philosophy and art, Sparta was respected for its strength and fortitude. The latter achieving this reputation was no easy task. Spartan boys were trained to be men by living in bare rooms, practicing self-denial, and being trained for physical combat almost constantly. This is where the term “Spartan existence” comes from.

What does this have to do with catching up with late payments? Well, one strategy debtors could employ is a Spartan-like existence – at least temporarily. Rather than treating yourself to nights out on the town, streaming entertainment subscriptions, or other frivolities, you could cut way back on your expenses by only eating food you prepared, avoiding costly amusements, and eliminating all nonessential costs. Every single dollar you can spare goes to – you guessed it – your outstanding debts.

No, it won’t be fun to cut back on all nonessentials – even if it’s just for a month or two. But it could be a learning opportunity to understand how much “disposable” income you actually receive each month.

Fortunately, you don’t have to live like a Spartan. But whatever path out of debt you take, it will require dedication and drive. Don’t let late payments and outstanding bills sour your personal finances. Do your best to get things in order. After all, you owe it to yourself!