How to Devise a Payment Plan

When you have several credit card accounts, a mortgage, auto loan and other consumer debt, you may need to get organized with a payment plan, which allows you to effectively manage your debt so that payments are made consistently and on time. A plan of this sort helps you to reduce your debt and make sure you are budgeting your finances properly. The first step: Devise a plan by matching your monthly payments with the flow of your monthly income.

Instructions

1

Make a list of all of your debts, including your mortgage, home equity line of credits, credit cards and auto loans. As you list your debts, make a note of the creditor, balance and interest rate. You can prioritize your list by due date. List those accounts which are due during the earliest part of the month. One of those is going to be the mortgage. This should be the first debt to get paid. Next pay those debts which are due next, such as the 2nd or 3rd of the month. This allows you to make payments on debts with early due dates and avoid getting penalized with a late charge. Once you get a late charge on credit cards, it can lead to increased interest rates. If you get paid twice a month, use your first paycheck to pay those debts due during the first part of the month.

2

Combine any credit card accounts. If you have five or six credit card accounts, you may want to consolidate them by completing a balance transfer. This eliminates the need to keep track of five or six accounts. Now you only have one to track and make payments on. None of your payments or accounts will fall through the cracks when you complete this plan. Match your due date on this account with your second pay period, since your mortgage is being paid out of the first paycheck. Sometimes you may not be able to do a balance transfer. If this happens, call your credit card companies and establish repayment plans, if you are having trouble making the payments. Credit card companies will sometimes lower your interest rates and monthly payments if you need assistance repaying your debt.

3

Start eliminating account balances. Every month after you have paid your mortgage, credit cards, auto loans and other debts, you should start applying extra funds to the lowest remaining balance on your list. This could be your credit cards or automobile loan. You can start moving down the list and get rid of the smallest balances first. This strategy allows you to pay your debts on time and apply extra funds to your remaining debts. You can then start moving in the direction of becoming debt-free more efficiently and effectively.