Budgeting

6 Steps to Take If You Can’t Pay Your Bills

With so many personal finance blogs out there,  there is no shortage of information about how to build good money habits. You can read countless posts about how to better your budget, how to make extra income, or how to save for a house. I write those posts, too, and I’m not knocking them at all. But why is there so little information out there for people who really need it?

If you frequent personal finance blogs, money is probably of interest for you, or you are already committed to figuring out your financial situation. But how do we help those people who are struggling with money, missing bills, and who feel out of control?

For anyone who can’t afford to pay all their bills, there are steps you can take to regain control of your financial situation. Here’s what to do if you can’t pay your bills.

1) Get Organized

What bills do you actually need to pay? Do you know where they are and for what amounts? Which ones are on auto pay? What bills have you already paid?

For many people, a simple lack of organization is to blame for missing bills. It’s not always that they don’t have the money to pay the bills, but that, in their disorganization, they can’t keep their bills straight.

By taking a few minutes to write down what bills you have each month, the account number for those bills, the budgeted and actual amount due, and the date it was paid, you’ll be sure to never forget a bill again. This only takes a few minutes and can be done on paper or in Excel.

2) Prioritize Bills

Now that your bills are organized, prioritize which ones are most pressing to pay. This doesn’t necessarily mean pay the highest interest rate first. If you’re struggling to pay all of your bills, it’s more important to make sure you keep a roof over your head by paying rent or a mortgage first. Then utilities, while making sure you have money for groceries.

3) Slash Your Budget

Next, analyze your budget to see what you can cut down or eliminate entirely. The goal here is to find as much extra money as possible. Expenses like clothes, eating out, salon appointments, and entertainment should all be cut out as much as possible.

And remember to look to see where you can save money on required expenses. Could you cut coupons to save money on groceries, or not blast the air conditioning so high in the summer? Doing this will help to lower all of your expenses.

4) Sell Everything You Can

Selling items can be a great way to find extra cash quickly. I am a huge advocate for selling items on Craigslist, Facebook, and OfferUp. I’m always pleasantly surprised about how much money I can get for an item that is essentially worthless to me.

Whether it is dishes, furniture, tools, or clothing, sell everything you no longer need. I periodically do this just to declutter our apartment, and I always walk away with a few extra hundred dollars. If you are behind on bills, that extra money could pay a bill entirely.

5) Stay In Contact With Your Creditors

If after doing all of these steps, you still have bills you can’t pay, it is time to come clean with your creditors. This won’t be a pleasant conversation, but it will prevent you from getting into even deeper trouble financially.

Call and see if you can work out a payment method. If you have enough money to cover at least part of a payment, pay that and see if you can come to an agreement on the rest. Companies want to be paid, and would rather you call and try to work things out than to simply not pay them.

6) Commit to Improvement

Living in a constant wondering of if you will be able to pay your bills on time every month is a dangerous place financially. At some point, you have to commit to break the cycle. Once you get behind on one month’s bills, every month thereafter becomes increasingly difficult.

There are so many things you can do to improve your financial situation. You can start earning extra money on the side, find a higher paying job, move somewhere with lower rent, sell your car and take public transportation, and build an emergency fund so that you always have a financial cushion. It does take effort, but it’s worth it to finally be able to get out of the cycle of debt and build wealth.

Have you ever been behind on bills? What did you do? If you haven’t, what advice do you have for someone who is behind on bills?

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