When you are behind on your bills, it is stressful. In fact, I remember the days when I was struggling to make ends meet. I worked my tail off to make sure I didn’t allow this to happen. However, that didn’t always work out the way that I wanted it to.
Many of us struggle with covering our expenses. You might be having to rob Peter to pay Paul each month. Can you recover?
What can you do when you are behind on your bills?
You will be told to pay the most important bills first, but aren’t they all important? And, if you do that, doesn’t that make things more stressful?
If you are doing all you can, you are probably extremely overwhelmed and not even sure where to start.
WHAT TO DO WHEN YOU ARE BEHIND ON YOUR BILLS
You can’t handle your money in the same when when you end up getting behind on your bills. It’s time to try something totally different, so you can get caught up.
MANDATORY LIVING EXPENSES FIRST
If you are behind on your bills, there are still things you need to live. These include: food, shelter, utilities, clothing (basics) and transportation. However, those that you can’t live without include only three:
Those are the items you need to pay first and foremost. Your other bills are not as important. That is not saying they are not important at all. They are just not needed for you to live.
Simply put: prioritize what you pay first.
Look at your bills and list the essentials at the top of your list. List them in the order of the least amount owed to the greatest. Do what you can to pay as many smaller bills right now. That way, you will feel like you were able to cover some of your expenses and no longer must worry about those items.
Read more: How to Create a Budget When You are Broke
ADDITIONAL LIVING EXPENSES – SECOND
Once you’ve covered the things you need to live, you can then focus on the secondary, or additional, living expenses. These include clothing and transportation.
This is where it gets tough. You might have to change where you shop for clothes for you and your kids. It may have to change from your favorite store to the second-hand store (or ask friends for hand me downs).
When it comes to your car, you have to really should be tough on yourself. Can you afford the vehicle you have? Is it leased with a high payment? Does the insurance cost a lot of money? Is it fuel efficient?
Only you can answer these questions. You may learn that it might be best to voluntary give up the vehicle. I had to do that in my 20s. It was not an easy thing to do, but getting out from that higher payment allowed me to purchase an older, less expensive car instead.
If you find you are forced between rent and a car payment, you pretty much have your answer. Let the car go.
You might love it, but at the end of the day, it is not important. Get an older car, which is less expensive, and get a lower monthly payment.
PUT AWAY THE CREDIT CARDS
If you are shopping like crazy with your credit cards, you need to stop. I am not saying that you can’t ever use them again. You just need to use cash until you get your bills under control.
Using cash really allows you to have a better picture of your money. You are also not borrowing against a future payment owed to you. It is just better to pay for everything you can right now, without having to worry that a bill is coming in the mail at the end of the month for all the purchases you made over the past four weeks.
Once your spending is back under control and your bills are being handled the right way, you can resume using your cards — responsibly.
Read more: How to Break Free from Using Credit Cards
MAKE MORE MONEY
If only it were that simple, huh? Believe it or not, there are lots of ways you might be able to make money. It may start with learning how to quickly make $100 to even working for yourself from home.
Additional money doesn’t just mean getting a raise, it means looking around and seeing what you might be able to do create additional cash.
ASK YOURSELF A SIMPLE QUESTION
Look at your budget and ask yourself this question: “Do I really need to spend money on this item this month?”
If you can’t afford rent, should you have cable? If you can’t put food on the table, should you pay for a gym membership? Here are some expenses you might consider eliminating:
- Dining Out
- Gym membership
- Magazine subscriptions
- Habits (coffee, smoking, drinking, etc.)
Identify these items helps you know which items you can remove from your budget, allowing you the money you need to pay towards your necessary expenses.
PICK UP THE PHONE
Take the time to talk to your lender/creditor. Talk to them about why you are behind on your bills due to your current situation. They might be willing to grant an extension on your payments, allowing you time to get your finances back on track.
For instance, if you can’t make your car payment this month, call the lender. Let them know what is going on. If you have not been late with payments and have not asked for help in the past, they might be willing to allow a deferment on your payment.
You never know what will happen if you don’t make the call.
Read more: How You Can Negotiate Your Debt
PRIORITIZE NON-ESSENTIAL PAYMENTS
When you are behind on your bills, you also need to determine which bills may result in the most adverse effects.
For instance, if you have a federal student loan, you will not feel effects on your credit report until you are at least 270 days past due. However, if you are one day late on your car payment, you could be reported for late payments.
If you make your car payment late, it could affect your credit card whereas there is more of a grace period when making the student loan payment. A little late is better than not at all.
DEEP LOOK AT YOUR EXPENSES
You probably know the regular expenses you can cut or those you must pay cover each month. However, do you know about the little things where you might be wasting money?
Perhaps you make a couple of runs to the coffee shop each month. If it is not a normal part of your routine, you might actually miss considering slashing this expense.
The simple way to do this is to look through your bank statements. Check every single transaction. Those small $5 and $10 purchases can quickly add up and really hurt your bottom line.
Learn where you are spending your money and where you can actually cut back.
These are the things I did when I felt I was drowning under the weight of my bills. It was not easy. Trust me. This will be a difficult thing for you to do. However, a few changes now will allow you to live better later.
Being behind on your bills causes financial stress. When you remove that, you feel better and can focus on other things in your life.