There’s a special type of anxiety that takes hold when you don’t have money to pay your bills. It’s a feeling you can’t quite explain unless you’re in the situation. But no matter how bad things get, there are two things to remember:
Losing control of your money doesn’t mean you’re irresponsible or that you’ll be unable to recover.
[See: Your 10-Step Financial Recovery Plan.]
Even financially responsible people can fall on hard times. I found myself in a challenging situation when I lost my job as a preschool teacher. I had emergency savings to fall back on, but I wasn’t able to find another comparable position for several years after getting laid off.
I had to slowly chip away at my savings until the situation became dire. If you find yourself in a similar position where you simply don’t have enough money to go around, here are a few tips from my own experience.
Cover the Basic Expenses Before Anything Else
If you have to choose which bills to pay, prioritize the ones that cover the basic needs of your family first. Necessity bills are the ones that keep the roof over your head, food on your table and the power running.
Put your expenses under a microscope and where possible, cancel accounts for anything extra like cable, monthly gym memberships and other unnecessary subscriptions.
[See: 11 Expenses Destroying Your Budget.]
Request Extensions on Your Bills
Call each company you owe and request a payment arrangement. If you pull a disappearing act, bill collectors have no choice but to assume you have no intention of paying. Explain your situation, so they’re aware you’re making every effort to pay bills.
When you have trouble repaying federal student loans, you may have two options – deferment or forbearance. Check your federal loan benefits to see if you qualify to postpone payments or reduce them for a while so you can avoid going into default while experiencing hardship.
Downsize and Sell Excess Stuff
If you’re in a position to change your living situation to save money, do it. There’s no shame in moving in with a relative. It’s easier for you to get back on your feet when you don’t have to worry about just playing catch up.
When I ran out of money, I rented out my condo to pay my mortgage. I wouldn’t have been able to pay my mortgage otherwise. I moved in with my family for a while until I could get my finances in order.
There are also dollar signs throughout your entire house if you look closely. Host a yard sale or put some of your unused furniture up on Craigslist to bring in some extra cash.
Take Out New Debt Sparingly
You should avoid robbing Peter to pay Paul, or in this case, using credit cards to pay other bills. However, in certain circumstances, taking out debt for bills is better than not paying at all. If you have good credit, you may qualify for a credit card that has an introductory special of 0 percent APR for the first six to 12 months.
The tactic here is to put necessity bills you can’t pay on the card and then pay at least the minimum balance until you catch up. Keep in mind: For this to work, you will need to pay off the card before the introductory special ends and interest kicks in.
A personal loan with a competitive interest rate is another option to consider. Just make sure before you take out any form of debt that you’re prepared to manage it responsibly.
[See: 10 Easy Ways to Pay Off Debt.]
Look for Ways to Bring in More Money
Joblessness may not be the reason you can’t pay your bills. Maybe your cash flow is out of whack because of a surprise expense. Start with your current job to see if there are ways for you to make more money there. If that fails, take on side gigs to help compensate.
When I couldn’t find work I had no choice but to make ends meet with side jobs. I took every side job I could. I dabbled in tutoring and babysitting because it was a good use of my education and experience.
Small paid instructing opportunities later grew into my current career as an educator and speaker. Your desire may not be to create a full-time career out of your side hustles, but there is money to be made outside of the 9 to 5 that can help you pay bills.
What to Do When You’re Back on Your Feet
As soon as your finances stabilize, get into the habit of budgeting. Continue curbing your excess spending until you’re able to build back up an emergency fund. This is highly important because you never know when another emergency will occur.
A few words of warning: Never let bills fester. Ignoring them won’t make them go away and bill collectors have even more reason to throw the book at you if you’re avoiding their calls.
Payday loans are also not the answer. Don’t get persuaded by the catchy advertising. You’re far better off shopping around and applying for loans or credit cards with competitive interest.
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What to Do When You Can’t Pay Your Bills originally appeared on usnews.com
