Start Effectively Managing Your Debts Today
Before you can pay your debts, you must first know what all of your debts are. Develop an organiza-tional system that will allow you to keep track of total debts owed, creditor information, and fees as-sociated with your debts. This will allow you to get a handle on all of your outstanding debts so that you can begin repayment. This system will also allow you to identify any debts that may have been reported incorrectly or are the result of fraudulent activity using your identity.
Prioritize Your Debts
Unless you win the lottery or receive a large inheritance, you will not be able to pay off years worth of debt all at the same time. In order to minimize the impact on your credit score and to ensure you are able to meet your most basic financial needs, you will need to prioritize your debts and focus on repay-ing the most important debts first. These priorities will often be decided based upon need and poten-tial fees associated with each debt.
Credit accounts typically require only a minimum amount of the total due is paid each month. Howev-er, choosing to pay only this minimum payment can have a negative impact on your credit score and your overall financial stability. Learning how these minimum payments can impact your overall debt will allow you to make smarter decisions regarding how you can best use the resources available to you. For instance, choosing between making several smaller payments to multiple creditors or one lump sum payment to a single creditor.