Late charges create a vicious cycle that can easily spin out of control, but with some determination and planning you can regain control of bills and put your personal budget back on track. Begin by pre-paying your bills one month in advance. To make this work, don’t try to do it all at once; that will only lead to frustration. Instead, tackle one bill at a time beginning with the smallest monthly bill. Most people find that a water or trash bill is an easy first step. VERY IMPORTANT: With financed debt, like credit cards, personal loans, mortgages and other financing, when you send in an additional payment, be sure to indicate the additional amount is to be credited to the next payment that will be due, not the principal balance. Otherwise, unless specified, your creditor may just take the extra payment from the outstanding balance that you currently owe. If you have enough money, this is not a bad thing! The following month, pre-pay another bill. Once you reach larger bills like a car loan or home mortgage payment, plan on saving up for a couple months to make the additional payment. Stay with it and eventually you will have all of your bills paid a month in advance and stop worrying about late payments and the penalties and increased interest rates that you may be penalized with. However, if you do suffer financial problems, don’t worry! You have built a safety net for yourself and you don’t have to worry about making your payments for another month.
There is another option, if you can hold yourself responsible. Instead of making the payments in advance, especially on financed debts, why not put a little extra money into a bank account each month until you have a few months worth of reserves? Then, leave it alone. In a bank account, you can earn interest, instead of letting your creditors have your money early. Whichever choice is right for you, remember to make your payments on time! It is not worth ruining your credit history, paying late charges or being penalized with higher interest rates.