Debt Reduction: How To Plan Your Bill Payments

By MySpendingPlan.com Editorial Staff

People require a lot of things to support their lifestyles.  But sadly, all these things come with bills attached.  Paying the bills on time every month can be quite a cumbersome task, especially if you have several bills.  However, to keep your credit score high and thus maintain good credit worthiness, it is important to plan your bill payments properly.  For example, even ONE late payment on a credit card bill can make your FICO credit score drop by 30 to 100 points, plus you get nailed with a nasty late fee!  Here are some tips to help avoid those situations.

Bill Payment Planning Tips:

1. Be timely in your bill payments:

Always ensure that all your bills are paid on time.  If you do not have the money to pay off some bills in full (credit card bills, etc.), then ensure that you at least pay the minimum amount due so that the bill is not considered as unpaid or paid late.  Even a solitary late bill can impact your credit score negatively and bring it down considerably.  And since late payments remain on your credit report for 7 long years, your credit score will also take a beating for that long.  Plus all the late payment charges can really add up.  So pay all your bills on time – send in the payment early enough to be received and processed before the due date. This also goes a long way towards debt reduction.

2. Consider electronic bill payment facilities:

Most utility companies, phone companies, credit card companies, and even many lenders accept bill payments online.  Paying your bills through the internet is a great way to ensure that they are paid on time.  Many a times people simply forget to go to the post office for stamps, or may just not find the time to mail their checks.  Plus, when you mail your payment, you must allow several extra days for the payment to arrive and be processed by the biller in question.  With online bill payments, all these inconveniences can be done away with.  In addition to being a fast and convenient system for bill payments, you will also save time and money on envelopes and postage.  And it is quite safe and secure these days.

3. Set up automatic bill deduction plans:

Many of your bills can be set up in such a way that the due amount is taken directly from your checking account, your salary, or your credit card.  This ensures that your bills are always paid on time and you do not have the added hassle of keeping track of the various bills.  Setting up automatic deduction plans for bill payments is especially great for bills that have to be paid each month such as electricity bills, telephone bills, credit card minimum payments, monthly loan repayments, etc.  Your bills will be taken care of and you will always be debt free.

4. Change bill due dates:

Many bills get paid late simply because it is difficult to keep track of which bill is due on which date.  You should contact the various companies and request them to change the due dates of your bills, if possible, so that they all fall due on the same day.  If you have a lot of bills, you could sort them into two different groups and have each group of bills due on two different dates.  Thus, only twice every month will you have to worry about paying your bills.

By following all the tips given here and creating a proper bill payment plan, you can improve your credit score and improve your credit worthiness.  This also ensures that your debt reduction efforts come to fruition and you become debt free.