by Susan W. Miller
Bills, bills, bills - does the mailman deliver anything else? What
am I going to do?
Maybe you really do want to pay your bills but just can't afford to
pay all of them this month. Which ones should you take care of
first? Knowing the answer to this question will help you get your
priorities in line, preserve your credit rating, and minimize the nasty
phone calls you receive. After much research and consultation with
other professionals in the financial world, there seems to be a
general consensus in this area:
1. List out the bills you owe, prioritize them, and draw up a FPLP -
first-pay/last-pay schedule
2. Make small payments on each bill instead of paying some in full
and delaying the others.
3. Don't hide from your creditors. Explain your plan and ask for their
cooperation as you stretch these payments. Assure them they will
be paid in full. If you have a plan in place, you may be able to even
give them some idea when they will be paid in full.
4. Stick to your new payment plan. If you are not consistent, the
lender might give up on you and take the next step - legal action.
Avoid those hassles by being consistent and in open
communication.
These are the bills to pay first:
A) Pay the rent or the mortgage.
You face eviction or at least a lot of hassle if the rent is not paid on
time. Most lenders grant a grace period and then tack on a late fee
if you are a homeowner. Foreclosure proceedings usually don't
begin until after payment has been missed for 3 consecutive
months. Late payments will, in fact, be reported to the credit
bureau.
B) Keep utility bills current.
Most companies will not disconnect for 60 days. There is almost
always a reconnect fee and much time delayed after you straigten
out the back payments and you do get reconnected. Stick to their
schedule or communicate with them about your situation.
C) Handle credit card payments monthly.
List out all the credit card balances, the minimum payment required,
and the interest rate charged. Put them in ascending order starting
with the highest interest rate charge and finishing with the lowest
rate. Pay off the highest rate first and continue to pay the minimum
on the others. Place getting out of debt among your highest goals.
D) Keep your insurance up-to-date.
Most insurance policies come with a 15 to 30 day grace period
which will still insure your coverage before the insurance expires.
Insurance is risk-management for your car, home, life, and health.
Starting over
will always be more expensive.
E) Take care of car loans or lease payments.
90 days seems to be the limit these companies will grant before
your car appears on their repossession list. Any late payments
here, like with your mortgage payment, will be reported to the credit
bureau. Some companies may report immediately. Communicate
your payment plan and stay in contact with the lender.
F) Pay the doctors, dentists, and hospitals.
Review the monthly bills you receive from these sources carefully
and be sure you understand every item. Ask any questions you
have immediately. Late payments for health services rarely get
reported to the credit bureau and rarely are there late charges
added on. Call the provider involved and tell them of your plan to
make regular payments of X number of dollars. Do not be
embarrassed to continue to seek medical services because
you cannot pay.
G) Give local business people their money.
Late payments to the dry cleaners, plumbers, yard people, or
handyman will probably not be reported to the credit bureau
and most won't charge late fees. These people want and need
your business. Remember that these are the people who also
keep your household running on a daily basis. Help keep theirs
running and pay the bill.
H) Work with the IRS
Work out a monthly payment plan to cover your taxes, back-taxes,
interest, and penalties. Never miss one of these payments. The
IRS can and very possibly will demand payment in full immediately
if you do miss a payment. They can file a lien against you. The
credit bureaus will hear about it and you will probably incur even
more expenses to get rid of the lien. Draw up a plan and make
those payments.
(c) 2002, Susan W. Miller. All rights reserved.
Susan W. Miller, President of Home Oasis International, a
Denver-based company selling organizing products and services
through home parties and online. She is the author of the "PRO
NOTEBOOK" a Personal Resource Organizer, a life-planning
tool to gain control over your personal and financial records.
Home Oasis International professionals are available to speak
to your group. 1-800-681-8681,
http://www.HomeOasisInternational.com