Yes, there are times when you might find it difficult to try and stay on top of your monthly payments. But this does not mean that you should simply stop trying. If you do, it could end badly for your finances.
There are a lot of scenarios that can happen when you choose to neglect your payments. The one that could impact you the most is getting into delinquent status with your lender. This creates many problems for you starting with an increase in the amount you have to pay every month. This comes from the interest, fees, and other penalties assessed on your account.
If this keeps up for a longer period and you cannot pay, you could default on your payments. What most lenders do if it is a secured debt is repossess the collateral on the loan. This helps them recover the amount they lent you. For most unsecured loans, they charge it as a loss and normally sell the account to a debt collection agency.
If you are not able to stay on top of your monthly payments and your account goes to a collection agency, you could soon start to get collection calls. Not to mention that at this point, your credit score would have taken a huge plunge for defaulting on payments. It will also stay on your report for the next few years.
To help you manage your monthly payments, here are a few things you might want to keep an eye out for.
Pay close attention to your household budget
Your household budget will play a crucial role if you want to monitor your payments. But keep in mind that putting a household budget together is not done in an instant. If you want to have a comprehensive budget, you need to sit down and roll up your sleeves and get to work. Gather all information you have on your income sources and all your payments to make sure you get a clear picture of your budget.
Once you do this, your budget will give you all the details you need to make sure that you are aware of all your payment schedules. This is a good first step to help you manage your payments better. Though a great start, remember that this is not enough. Knowing is just half the battle, you need to make sure that you have the funds to meet your payments.
Your budget should be able to give you a bird’s eye view of your income and expenses. From here, you get an idea not only of which payments are due but if you have the funds to cover them on their due date. If you anticipate some problems, your budget will give you a chance to move things around keeping you on top of your payments.
Stay on top of your monthly payments by listing them down
More than your household budget, you can actually take it a step further and actually list down all your monthly payments separately. Yes, this needs to be in your household budget. But if you feel like you need to always have quick access to your payment list, make a separate copy and keep it close to you at all times.
There are a number of reasons you might want to do this. Most common of which is that you do not want to bring your budget with you everywhere you go. You want to keep it a home where you get to sit down and work on it every week or every month. But at the same time, you always need to know what your payments are in case you are tempted to splurge on your wants.
Include payment schedules in your calendar
One way to help you stay on top of your monthly payments and have your payment list with you at all times is to use your mobile calendar. You can sync your payment due dates in your calendar to help you monitor scheduled payments. This can help you stay aware of your financial obligations since you most likely always have your smartphone with you at all times.
It helps you see what payments are due in a few weeks or even days. If you are enrolled in automatic payments, you do not get surprised with payments being debited from your account. You simply check your calendar from time to time to manage your payment expectations. It would be easy to cross-reference payments with your calendar so you stay on top of things.
Consider debt consolidation
There are times when it just seems too complicated. You deal with varying payment amounts at different due dates with different interest rates per account. It is possible that you could come to a point where confusion sets in, you start missing payments, or even pay the same lender twice a month. You then come up short and might need to move things around.
If this is the case, why not explore getting into a debt consolidation program? This can help you stay on top of your monthly payments and simplify the whole process. The way it works is that you combine most if not all your payments under one account. This way, you only focus on one amount, one due date, and one interest rate. Forbes also shares that debt consolidation is a good idea if you have several high-interest loans.
Take your credit card payments for example where you could have multiple accounts you are paying off. If you could combine all of them into one payment, you get to focus on just one account. It will also help if you can take advantage of a 0% interest promotional card to help you save money with interest payments for a few months.
Ideas to prevent increasing monthly payments
There are times that you could find it difficult to stay on top of your monthly payments because you find it difficult to control your spending. Just as you are getting to significantly make headways with your payments, you suddenly make an impulsive purchase. This could bring you back to square one with your payments. Here are a few things to help you get a handle on your monthly payments.
Experiment with a frugal lifestyle
Frugality is choosing to live and spend below your means. This means that with a budget in hand, you try to find creative ways to still use less than what you have planned. For some, this means planning and preparing weekly meals. It could also be choosing just one car at home and arranging your schedule around it. These small things can add up giving you a chance to stay away from additional expenses and save money in the process as well.
Work with an accountability partner
Letting people close to you know about your financial plans can help keep you on your toes. For married people, this usually means your spouse. You sit down with them and talk about your plans. It is at this point that you intentionally ask each other’s help to keep you accountable and check on your progress with your goals. Are you able to stay away from impulsive shopping? Are deliveries for unnecessary items still showing up at your door? Having an accountability partner can make you think twice before adding unnecessary expenses every month.
Consider going on a credit card diet
There is a good chance that your credit card is a big reason behind uncontrolled spending. You may not even realize you have fallen into a false sense of financial independence. This is where you think you can afford a specific purchase because you have a credit card. When in reality, it will put you further in the red. Try not using your credit card for a few weeks, or at least limit it to emergency use only. You could be surprised by the difference this can make.
It is challenging to try and stay on top of your monthly payments but there are tips to help you monitor them. You just have to have a lot of discipline and keep your eye on your goals.