How to take control of your bills

It’s a common scenario: You wake up in the middle of the night, and while you try to get back to sleep, your mind veers to the topic of money. Before you know it, you’re wondering whether you forgot to pay the bills — or worse — that you don’t have enough money to pay them.

We all have a different financial makeup. Some of us are planners, and some of us procrastinate. But we all have one thing in common when it comes to our finances: bills. Each year, more than 25 percent of Americans miss a bill, according to The National Foundation for Credit Counseling. And that opens the door, not only for late fees, but for interest hikes on your credit card and a potential ding to your credit score.

[See: 11 Ways to Save Time and Money.]

Here are five easy steps to organize your bills, pay them on time and stay in control of your finances.

1. Analyze: Take a step back and look holistically at your finances — that means what you have saved in the bank and your current spending habits. You’ll need to be honest with yourself on what your finances look like. It’s a difficult step but an important one to understanding and taking control of your money.

2. Prioritize: Open up those bills and start making sure that you have the basics covered — housing, transportation, utilities and food. Then look at the bills you have been paying and decide if some expenses, such as cable, dining out or subscriptions, can be eliminated. If you have federal student loans, you can investigate deferment, so that you don’t have to make payments until you have some financial breathing room.

3. If you’ve already dug that debt hole … stop digging: If you’re struggling with making ends meet or living paycheck to paycheck, it’s time to freeze any unnecessary spending or new expenses. It can be the hardest part of getting in control of your money, but it’s worth it. That means hitting pause on those dinner plans, movie tickets and weekend shopping trips. Instead, find ways to have fun that are light on the wallet, such as renting a movie at home or cooking dinner with friends.

4. Tackle credit card debt: Zero in on the credit card with the highest interest rate or monthly finance charges first and focus your payments there while continuing to make the minimum payments on your other credit cards. Once you pay off the card with the highest interest rate, move on to the card with the next highest interest rate and so on.

[See: 12 Simple Ways to Raise Your Credit Score.]

5. Pay bills virtually: Managing and paying bills can feel impossible when they’re buried under piles of paper. Getting organized will help, but paying bills online or through an app means eliminating paper altogether. Setting up automatic bill payment will help you avoid overdraft fees, penalties and interest. Budgeting apps that have bill payment features can do all of the work for you, so you never miss a bill payment again.

6. Negotiate: Make a list of your creditors and their phone numbers. Call each one and ask to talk with a customer service representative. Explain why you’re having financial problems and try to negotiate more favorable terms, such as a reduction in your interest rate or a suspension of payments for several months.

7. Get your credit report: Don’t be scared to look at your free annual credit report and credit score. You can access your credit report at Make sure that those records are accurate. You also want to be sure that you are aware of all debts listed on your credit report. If you find mistakes, you can dispute them.

[See: 8 Big Budgeting Blunders — and How to Fix Them.]

8. Track your progress: Make a point to track how far you’ve come with your debt. Keep a log of how much you’re paying off each month and how much you’ve paid per bill. This will help to keep your finances organized. It will also help you stay on top of how much money you have every month for other expenses. It can be used as a reminder once you’re out of debt, and your bills are under control, of what could happen if you let things slip.

It may seem like there’s no way out when the stress and anxiety of unpaid bills weigh you down. But know that you’re not alone. There are ways to take more control while you work to turn that mountain of bills into a more manageable molehill.

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