What to do if you're behind on your bills
There may come a time when you struggle to afford all your bills one month. Or maybe it happens to you every year when you pay in to taxes or bring your dog to the vet. Regardless of the reason, here's what to do if you find yourself falling behind on bills and how to avoid this from happening again in the future.
Get Organized
First things first...if you don't have a budget yet, create one to compare your income and expenses. Next, make a list of all the bills you need to pay and prioritize them, starting with necessities such as housing, utilities, groceries, transportation to work/school, insurance, car loan, and student loan payments.
Create a Plan
Once you complete step 1 above, it's time to get a plan in place. Determine how much you're short this month and be sure to pay for necessities first. Meanwhile, go into crisis budgeting mode, cutting out any non-necessity that you can (such as dining out, cable, gym membership, hair/nails, etc). Hopefully this alone will allow you to afford all your necessity bills. If not, then the next step is crucial.
Call Your Creditors/Service Providers
There are several different ways calling creditors and other service providers can help. For instance, if you have cable, call and ask to temporarily suspend service. Even though there may still be a fee, it's likely drastically smaller than the regular billed amount. You could also contact your utility provider to check if there's a budget payment plan available.
Check with your student loan servicer(s) if you are eligible for a temporary forbearance or economic hardship deferment. If you have a vehicle loan, you could also ask about a short-term forbearance. While it may add on payback time and interest charges, it's better than missing payments and tacking on late fees, along with hurting your credit. If you can't afford credit card payment(s), call your creditors and explain. You'll never know what your options are unless you call.
Following the above steps should get you through a tough month or two. Here's what to do next to hopefully prevent falling short on bills in the future.
Stick to Your Budget
Now that you have a budget, make a conscious effort to stick to it. That means finding a way to avoid overspending. So try making lists and not going off of them when you're shopping, or maybe avoid shopping as much as possible if that's a trigger for you. You could also give yourself an allowance for fun stuff/going out/dining out. Once that amount of money is gone for the pay period, then you are done spending. Another smart idea also is to get rid of one non-necessity expense for good to create a little wiggle room in your budget. It takes effort, but you can do it!
Build Emergency and Periodic Savings
Last but definitely not least, it's time to work on building up savings. Why? Because savings is the best way to prevent a financial crisis. Set aside a little money into emergency savings from every paycheck, shoot for a minimum of $25 (but every little bit helps). And add more into savings whenever you can.
With that said, it's important to have periodic savings as well. Especially if one of those periodic expenses is the reason you fell behind on bills, you need to save up for the next time it comes up. Do your best to estimate what that cost will be. Again, think veterinary bills, vehicle tabs, Christmas presents, school clothes - any moderately large expense you know will be coming up that is not monthly.
If this process seems overwhelming, the good news is that LSS can help. Our financial specialists will create with you a realistic budget and provide steps to take to get back on track financially. Call us today for your free session at 888.577.2227 or GET STARTED ONLINE at your convenience.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.