Your credit score is important these days for getting the best rates on auto loans, credit cards, home loans and even the best price on your car insurance. Many people struggle to pay their debts and often fail to pay on time. Interest rates keep getting higher, while credit limits get lower. It’s easy to drown in unpaid bills that accumulate in a blink of an eye. The problematic attitude that prevails in many people is the “buy now, pay later” mentality. In many cases, consumers purchase more than what they’re capable of paying.

If you want to bring down your credit card balances and maintain a good credit standing, you’ll need a structured and disciplined approach.

Follow these five smart strategies to help you reduce your debt, learn savvy credit management, and improve your credit score.

1. Find out exactly how much you owe.

A lot of people will assume that they have a certain amount of debt, for example $10,000, when in reality, it’s $13,000 or much more than that. It’s important that you find out first what debts you have and the exact amount of each debt. Write down your debt and interest rate on every credit card you have.

2. Negotiate lower interest rates.

To make considerable savings on your bills, it’s wise to ask your creditors for a lower interest rate. Oftentimes, all it takes is a phone call to the credit card issuer to a get a lower rate, provided that your credit score is 730 or higher and you have a good payment history. One or two percentage deduction can translate to hundreds of dollars of annual savings. Tip: tell the customer service representative if a competitor has offered you a lower rate, and they will most likely match the competitor’s offer.

3. Pay bills on time.

This is the best way to boost your credit score. Late and missed payments are major red flags for creditors. Even a single late payment can affect your score. Moreover, late payments are costly as creditors charge huge late payment fees. A recommended way to ensure that you always make on-time payments is to enroll in automatic payments.

4. Set milestones for paying debt.

Having a clear goal is an essential component towards being financially stable. Write down your overall unsecured debt, and then figure out a realistic timeframe for paying down that debt. Set three or more pay-down milestones, and determine your target debt balance by each milestone date. Make sure to perform periodic checks to check that you’re right on track and to make any necessary adjustments.

5. Track costs and set a budget.

Study your credit card bills and bank statements to find out what makes up your monthly spending. Track your regular expenses, such as utilities, mortgage, minimum credit card payments, and insurance. Then, create a suitable budget that will cover all essential expenses.

Cut back on unnecessary purchases, especially luxurious and leisure items. You’ll need to make some sacrifices, but with proper budgeting, you can make little adjustments one step at a time to reduce and ultimately eliminate your debt. Keep a spending diary to monitor your progress, and add reminders to your calendar to check up on your finances.

These steps will help you manage your debt and live a financially stable life. Keep in mind that your spending habits contribute a lot to your overall debt, so make it a point to avoid buying unnecessary things that you can’t afford. It takes discipline, consistency, and dedication to maintain a good credit standing and be debt free.