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4 Things to Consider When You Can’t Pay Your Bills

If you’ve ever had that feeling of dread that accompanies the sight of a new bill that you can’t pay, then you’ll already know that having trouble paying bills can be a huge point of stress in your life. Maybe you’ve been let go from work, or you’ve run up debt and need to divert some of your budget towards paying back what you owe instead. Whatever the reason is, it may not always be easy to keep up with your bills.

Remember though, if you do run into a problem like this, it doesn’t have to be something that carries on for the rest of your life. The key is to put together a plan of action and establish a financial safety net to prepare yourself in case something like this happens again.

There are a few steps you can take when you can’t pay bills that may help you get out from under some of the expenses or debt hanging over your head, and limit some of the harm that may come from delinquent payments. We’re going to walk you through those steps now and try to help you get your finances back on track!

1. Review (or Create) Your Budget

The first step in this entire process is to thoroughly review your finances and identify how you got into this situation. If it’s something major like a job loss or an unexpected expense, this should be fairly simple and you can start to focus on taking the necessary steps to put things in order. If the drying up of your bank account caught you by surprise, or there wasn’t one specific thing that led you to financial insecurity, then you may want to dig a little deeper to identify where your money has been going.

Next, you’ll need to identify the essential expenses that you can’t afford not to pay. These will be things like housing costs, food, utility bills, and more. You should then aim to prioritize what you spend your money on. When you can’t pay your bills, your essential expenses are going to need to come first. Things like travel and entertainment are going to have to be put on hold until you get your finances back on track.

Now, maybe you can’t pay bills not because you’ve been neglecting your budget, but because you don’t have a budget at all. If that’s the case, then it’s time to make one! There are plenty of different budgeting methods out there for you to explore, and you’ll need to do some research to find what you think you’re best suited to. Maybe something like the envelope method, which puts actual cash into your hands, can help to regulate your spending, or maybe it would be better for you to break your budget down into percentages. Do some research and see what works for you.

2. Talk to Your Creditors

The next thing for you to do is to make sure you let your creditors know that you’re going to have some trouble paying your bills. Hiding this from them won’t help the situation and can only make it worse.

You may find that your creditors are actually willing to work with you to regulate the situation. Maybe they’ll work out some sort of a payment plan with you, defer a few payments to a later date, or even waive some percentage of your late fees.

person on phone who can't pay bills

It would be normal to feel uncomfortable with the idea of making calls to creditors to tell them you can’t pay your bills. But there’s nothing to be embarrassed about! These types of things happen to people all the time, and these companies typically have entire parts of their staff that are designated to work with people in your situation.

Just remember, it’s never a good idea to ignore your creditors when they try to contact you. Maybe it seems like an easy solution in the moment, but in the long haul it can only make things worse.  Your debt won’t disappear if you ignore it, so it’s better to face it head on.

You should also keep in mind that even if you work out an arrangement with your creditors, there still may be consequences for late payments. This could include things like late fees or damage to your credit score. Make sure you’re aware of the potential consequences before contacting your creditors.

3. Look for Ways to Make Supplementary Income

It may seem like an obvious concept, but when you can’t pay bills, you’re going to need to do what it takes to catch up quickly. Making cuts and adjustments to your budget and general spending habits can go a long way, but sometimes it may not be enough. The next step in your financial recovery may be to look for ways to supplement your income.

For you, this might be something relatively straightforward like picking up extra shifts at work or finding a part-time job to add on top of your primary source of income. But you may also need to find some other creative ways to supplement your income. You could do things like:

  • Have a yard sale.
  • Sell used but still functional items on eBay or Craigslist.
  • Cancel your cell phone plan and go with a pay-as-you-go type of service.
  • Rent out the extra room in your home.
  • Consider selling your house altogether and either buy something less expensive, or move in with friends or family if that’s an option.
  • Sell your car and downgrade to something less expensive.

Some of these things may be more feasible than others, but use them as inspiration and see what works for your situation.

4. Take Control of Your Debt

Like we’ve mentioned, there are plenty of different ways for you to stumble into a situation where you can’t pay your bills. One of the main ways is to find yourself under a mountain of debt with no easy way out. If this means you, it’s time to get proactive and start chipping away! But the question remains, how do you go about it?

person doing research online on what to do when they can't pay bills

Well, there are a few different ways to tackle debt, so you’ll need to do some research and see what works best for your situation. One common method is called the debt snowball. Here’s how it works:

First: Make a list of all your debt and list them from smallest to biggest, ignoring the interest rate. Then make minimum payments on all of them, except the smallest one.

Second: Now is the time to work on paying off that smallest debt account. Once you’ve paid it off, move on to the next smallest one and keep making minimum payments on all your other accounts. Try to take any extra money you have in your budget to pay off your debt.

Third: Once you’ve paid that debt off, move on to the next. As you continue to pay your debt off, you’ll naturally be freeing up more money to tackle the next debt account on your list.

Keep the momentum going and make your way through all your debt until you’re completely freed up. Just remember to work within the confines of your budget and make sure you’re still taking care of your essential expenses.

Start Building an Emergency Fund

Sometimes, the reason you can’t pay bills stems from an unexpected emergency. For example, let’s say you’re driving on your way to work and run over a nail, leading to a flat tire. If you don’t get that fixed right away, you may have no other way of getting to work and you could miss a few shifts. If you miss a few shifts, your next paycheck may be lighter. And that could give you some trouble paying bills.

So how do you avoid this? It starts with an emergency fund. While this isn’t a tip that’s going to get you out of trouble right away when you can’t pay bills, its purpose is to help prevent you from getting into a precarious situation down the line.

To learn more about building an emergency fund, you can take a look at a previous article from our blog. But generally, experts typically recommend having three to six months’ worth of living expenses saved in case of an emergency.[1] This can vary based on your lifestyle, but don’t feel like you need to get there overnight. Go at your own pace and start contributing what you can to this fund.

If you do end up running into an emergency expense without the savings to cover it, you may want to consider installment loans online. With short-term installment loans, your payments are spread out over several months in a series of scheduled payments which may make it easier for you to incorporate these payments into your budget.

Keep in mind that an option like this is intended to be a last resort in emergency situations. It’s generally not advisable to take on more debt when you’re having trouble paying your bills or to pay off other debt.

Don’t Panic When You Can’t Pay Bills

We know that the prospect of not being able to pay your bills this month can be stressful, but it doesn’t mean that things are hopeless. There are steps you can take that may be able to help you get out of this situation.

Remember to review your budget, communicate with your creditors, look for supplementary income, and do your best to tackle your debt. And don’t forget to start working on an emergency fund to help you handle emergency expenses down the line. With a little time, effort, and the right knowledge in hand, you may be able to work your way out from a situation where you can’t pay your bills.



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