If you have loans or credit cards with high interest rates, most of what you pay goes toward finance charges. Quickly paying off loan balances with high interest rates can free up cash to pay other bills. Another option is to pay off loans that have small balances. Once they are entirely paid off, you will have extra money to pay for larger balances. It is best to develop and write down a plan to help you manage your debt altogether. 

Getting rid of some debts

If you bought any furniture or electronic equipment as rent-to-own, you might be able to return the item. Then you don't have to make any more payments. Check to see if this is an option. Be sure to ask if there will be a fee included for doing so. Also, note that some debts may have a statute of limitations. If the debt is very old, the statute of limitations may release you from having to pay. After that amount of time passes, a creditor can no longer force you to pay. Check with a lawyer before making any new payments on a very old debt. 

Exploring what benefits are available to you

Find out how to increase your income. You may be eligible for the following discounts or government benefits:

• Food stamps (SNAP),
• WIC (women, infants, and children nutrition program provided by the federal government),
• TANF (Temporary Assistance for Needy Families),
• Unemployment benefits,
• LIHEAP (Federal Low Income Home Energy Assistance Program),
• Programs established during COVID-19 to help homeowners catch up on water debt,
• Lifeline telephone assistance program that make communications services more affordable for low-income consumers,
• Federal tax credits,
• Free or reduced-price health insurance (All Kids if you have children),
• Homestead Exemption (if you own or are buying your own home), and
• Illinois Senior Citizens Homestead Exemption (if you're over 65 and own property).

What if I am a Veteran and I owe money to the VA?

If you have debt managed by the VA, you may be able to temporarily stop fees and interest. You may also be able to extend the terms of your repayment plan.
 
For debt related to:

• VA benefits - contact the VA Management Center at 1(800) 827-0648, and
• VA healthcare - contact the VA Health Resource Center at 1(800) 827-4817.

Cutting back on spending

Think hard about what you and your family can do to lower the amount of money you spend each month. Think about expenses that you can cut out of your budget:

• Do you eat out often?
• Do you buy more groceries or clothing than you need?
• Can you trade in your car for one that has better gas mileage?
• Can you trade in your car to lower your car payments?
• Can you get a roommate to share the housing expenses?
• Can your family members lower their spending in any of these ways?

Being aware of minimum balances and interest

Paying only the minimum payment on a bill that charges interest can be a problem. The minimum payment is usually 2-5% of the total amount you owe. Paying only this amount stretches your debt over many months or years because interest costs continue to add up. If it seems like you'll never get the bill paid off, you're probably right. This is known as the minimum payment trap. 

You can get out of this trap by always paying more than the minimum balance that is due. Paying more than the minimum balance will allow you to pay off the bill faster. You will pay a much lower total amount in the long run because there will be less time for the interest to add up.

Repaying debt faster

When you pay off one bill, what will you do with the money you had budgeted for that bill? How you use that extra money can make a difference in how fast you repay your debt and how much you pay. It can also help determine how much you can pay on other bills. You can take the money you would have spent on the paid off bill and use it to pay off another bill. This way, you pay off the second debt faster and save money from the interest that would have been charged.