Every week I hear at least one person complain about bills. They’re either frustrated by the cost of basic necessities such as rent, health insurance and food, or they feel stuck in a rut and can’t get ahead.
Most of us can identify with at least one of these complaints. Our finances can be anything but perfect, and sometimes, there just isn’t enough cash to go around. And when you don’t have enough money, you might skip paying a bill.
Although you can’t give what you don’t have, there are consequences to not paying bills. You could get hit with late fees, and some lenders may report the late payment to the credit bureaus. It’s a no-win, but there are strategies to get through these times.
Prioritize Your Bills
Not all debts and bills are created equal. In a perfect world, we would be able to pay all of our monthly expenses with no problem. But this isn’t always the case. If you only have money to pay some of your expenses, prioritize and pay bills in order of importance.
You may hate the idea of skipping or paying some bills late, but it’s better to be ahead on some bills than behind on all of them.
Priority expenses include your mortgage/rent and groceries, followed by essential utilities like water and lights. You need a roof over your head and food on the table more than anything else. Once the important expenses are taken care of, you can use whatever funds are left for other bills, such as loan payments, unsecured debt, telephone, Internet and subscription services.
Drop Nonessential Expenses
If you can’t pay your bills, start dumping nonessential expenses immediately. Chances are you’re spending money every month on stuff you don’t need. You might think you can’t live without a gym membership or your Netflix and Hulu subscriptions, but you can.
Even if some expenses only set you back $10 or $20, this money adds up quickly, and it’s cash that can go toward bills. I recently did a financial self-checkup to see where my money goes, and found that I’m spending nearly $50 a month on extra services:
- Netflix – $7.99
- Spotify – $9.99
- Busch Gardens season passes – $19.32
- Identity theft protection – $9.99
These expenses are within my means, and this list is shorter than the list I had two years ago, so I’m okay with the numbers. But if things get tight, you better believe these expenses are the first to go.
From time to time, do your own self-checkup to see which expenses you can eliminate to improve cashflow.
Hustle and Earn What You Need
If you need immediate cash, there are many possible ways to drum up money in just a few days, but you have to get creative. For example, one of my friends needed a couple hundred dollars for a car repair. Rather than borrow the cash, he grabbed a lawn mower and went door-to-door offering grass cutting services for $25 to $30 each.
If you don’t want to deal with yard work, maybe you could wash cars, offer weekend babysitting services to friends, relatives or coworkers, or take up other odd jobs. People are busy nowadays, so it won’t be hard getting them to pay for basic services.
Keep Creditors in the Know
Hiding from creditors only makes a situation worse. Not only do you ruin your relationship with the creditor, you’ll pay late fees, and defaulting on a bill can damage your credit score.
Creditors may seem like the bad guys, especially when they’re blowing up your phone. But you don’t have to pull a disappearing act. When you stay silent and don’t pick up the phone, you rob yourself of any opportunity to receive help. If the company knows your situation, you might receive a due date extension, or the creditor might allow a partial payment. Some student loan lenders even offer deferment and forbearance. And there are auto loan lenders that offer skip payment options. Whatever you do, keep your creditors in the loop.
Skip the Cash Advance
When you can’t pay your bills, a cash advance or a payday loan might be tempting. These short-term loans provide emergency cash. And since you don’t need a credit history or a cosigner, these loans can seem like a simple solution. The problem, however, is that these loans have high fees and you’ll pay as much as $30 per every $100 borrowed.
I know people who swear by payday loans, but I say consider your options before going down this road. It’ll be more cost-effective to put your pride aside and get a loan from family or friends.
When bills are due and you don’t have money, you can’t wave a magic wand and wish money into your bank account. Even so, there are practical ways to manage expenses until your finances improve. This can ensure that your important expenses are covered, and it can help you maintain a good relationship with your creditors.
What suggesting can you offer for dealing with payment problems?