5 Things to do when you have more bills than your gross income

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By: Good Nelly
on 18th Sep,2014

Often, in life, we arrive at such a point where our spending becomes superior than our income.
5 Things to do when you have more bills than your gross income

Often, in life, we arrive at such a point where our spending becomes superior than our income. Debt piles up! So do other bills, like rent, insurance, education, etc.

Certain times, it becomes almost impossible to cope with the mushrooming debt and other obligations. But what if you don't have that necessary income to keep with with the swelling expenses. This is probably everyone's story out there, right? So what you might do to keep up with everything?

Here are 5 tips you could initiate when your debt and bills cross your income.

1) Check your standing: When your spendings overwhelm your earnings, it's evident that you have messed up a lot. Knowing your footing is the very first step you should take to get hold of your finances.

Pile up all your bills and get your accumulated owing. Sort through all and consider your gross income. Be realistic and honest about your situation and know your standing. Once you are aware of all these, you can chalk out a constructive plan and start working on that.

2) Prioritize your bills: Even after trimming the additional fat from your budget, there still might be some bills left. You need to prioritize your debts and should only pay the ones that matter to you the most.

First, take into account the secured debts - your mortgage and car loan. Non-payment of these loans can result in losing important assets. Also, consider important bills like insurance and utilities in the first place. Other loans, such as unsecured credit card bills are not that much important and you can move those to the bottom of the list.

3) Deal with your creditors: When you accrue more debts, chances are there that you'll have to sit with your creditors. It's important that you are aware of your rights as a debtor when it comes to debt collection. Check out the Fair Debt Collection Practises Act.

Again, if your conduct as a debtor has remained fair enough, your creditors might offer you some additional breathing space by offering you with a manageable repayment plan.

4) Consider credit consolidation: You could bring down your debts to some extent by consolidating them. When you have a lot of bills, it can be very hectic to keep track of everything. Again, there are the varying interest rates. Credit consolidation can help you manage all your unsecured debts and bring them under one umbrella - with one interest rate and one affordable monthly payment.

You can also approach a credit counseling agency to do all the needful on your behalf. However, you need to be careful while choosing a credit counseling agency. The government offers help so that you find a reputable credit counselor that makes a plan for you and manage your unsecured debts.

5) Re-establish your credit: When you are done with your debt problems, concentrate on getting back your credit score to where it was before. If you want to build your credit score, the best thing you could do to achieve this is going for a secured credit card. A secured card is always the first attempt since if you make regular payments, you'll be able to improve your credit score.

You won't be able to get an unsecured credit card if your credit score is low. So once you start with a secured card and get some improvements in your score, you'll be able to get an unsecured card within few months.

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