What to do When you Can’t Pay Your Bills

By Randall Orser | Budget

Not having enough money to cover your monthly bills is a scary situation.  There are many ways that this can happen, overextending yourself with too much debt, having an irregular income or losing your job.  There are many signs that tell you that you need to cut back on your expenses or earn more money but not being able to pay your bills is a huge red flag that you immediately need to take steps to deal with your financial situation. 

  1. Reduce Your Expenses:  You need to find ways to reduce your monthly expenses and you can usually do this in more than one area.  Find a roommate or a cheaper place to live, carpool to work, cut back on your food budget, shop around for a cheaper cell phone.  You can also cut out things that are not necessities such as clothes, eating out or vacations.  Most important is that you stop using your credit cards right away as more spending on them will make your situation worse.
  2. Find Additional Income:  Next you need to find an additional source of income or a new job.  You may be able to pick up an additional part-time job or sell off some things that you no longer need or use.  A second job should only be temporary, so if you find that you continually need the extra income from it you should consider getting a better paying full-time job.
  3. Find a Long-Term Solution:  Looking for a long-term solution may mean making a career change or going back to school for more training to enable you to get a job where you earn a good salary.  You should also get more serious about budgeting your money so that you can see where you are overspending and where you can cut your expenses.
  4. Remember your Priorities:  Back to budgeting, make sure that you are covering your basic needs before paying your creditors.  Your basic needs include housing, food, medical needs, and utilities.  Once you have covered all these necessities you can start to pay your creditors.  
  • Working with your Creditors:  See if you qualify for a reduced payment or if they can temporarily reduce your interest rate, though they may want you to stop using it.  Lowering your monthly payments will always help your financial situation even though your credit rating may be damaged.  You should document all calls with your creditors and debt collectors and send all letters regarding payments by certified mail to prove that you sent them. 

From an article by Miriam Caldwell

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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.