What to Do When You Can't Pay All of Your Bills This Month
Published on August 23rd, 2019 by CreditFresh
Did you know that 60% of Americans are anxious about bill payments and nearly half are late on paying them?
If you foresee yourself possibly not being able to pay all of your bills this month, you’re certainly not alone. At the same time, this doesn’t need to be a problem that becomes an ongoing issue, rolling over month-to-month.
The important thing is you take corrective action, come up with a plan, and establish a financial safety net right now.
When you find yourself in a financial bind, here are some steps you can follow that may help you get out of it and prevent a similar situation from happening again.
Determine the Specific Consequences of Missing Each Bill
We’re sure you’ve already done some version of this in your head, but it helps to put it down on paper. But how do you figure this out?
Review Your Bills
Start with the services that are essential to living your life and take note of how much you owe for each bill. This could be the basics such as heat, electricity or gas. Or it could also be childcare expenses or your transit pass to get to work.
Review the Repercussions of a Late Payment
Some late payments may result in significant consequences aside from late fees, and it’s important to understand what these consequences are. Some bills that may have significant repercussions for missed payments that extend beyond late fees include:
- Child or spousal support payment
- Mortgage payment
- Car payment or car insurance payment
- Secured loan payment
For example, a series of late child support payments may make it difficult for you to renew your driver’s license or your passport, or potentially having your wages garnished. If you’re late on car insurance payments, you could be dropped by your provider, forcing you to find another provider at a higher rate. Also, late mortgage payments may put your home in jeopardy.
Any secured loan payments may have significant consequences for missing payments. You may have put a piece of property or an asset up to secure this type of loan, which obviously places a high priority on keeping it in good standing.
Keep in Contact With Your Creditors
As cumbersome as it may feel, you need to keep the lines of communication open with your creditors. Take their calls instead of hitting ignore and sending it to voicemail. Respond to their emails. You will actually want to reach out to them before they even start calling you. As soon as you know you’re going to be late on a payment, call or email the company to set up a payment arrangement.
Some people may dread making these calls because they feel shy or embarrassed, but there’s no need. These things happen and many companies have entire divisions of their staff dedicated to working with you to keep you as up to date as possible.
Never “ghost” or ignore your creditors. It may be easy to do now, but it will be harder on you in the long run. You can’t outrun, out-wait or ignore debt. There is no statute of limitations and a debt won’t expire if the creditor doesn’t get a hold of you.
So, answer the phone and make some quick calls if you’re going to be late on your payments.
Ask Yourself Why It Happened and Be Honest
You need to take a frank look at your finances to determine why you’re short this month.
If you’re short because an unexpected expense popped up, that certainly happens to the best of us. Nobody is immune to their car suddenly needing repair, or suddenly needing a dentist for a cracked tooth. In fact, about 40% of Americans said they would struggle to cover a $400 unexpected expense.
If an emergency expense is the reason you’re in this situation this month, you might want to consider a financial safety net for the future. But, more on that later.
If you’re experiencing a cash shortfall because you’re living outside your means, you may need to take a different course of action. If you take a look at why this happened and think, “I spent too much money this month,” ask yourself if you’re spending too much money every month.
It could be time to take an honest and detailed look at your spending habits and create a realistic financial budget. Not too many people enjoy looking at their own bank and credit card statements to audit their own spending, but you may end up feeling better once you have a clear view of your financial situation. You may feel more in control now that you’ve taken the reins, and it may actually help alleviate some stress now that you have a plan in place.
Revisit Your Spending
Take a thorough look at all your spending. Pay particular attention to all of those little purchases that appear; a shot of espresso here and a sub sandwich for lunch there.
It’s not always easy to see how expensive grabbing coffee and food on the go truly is. If you eat out 2-3 times a week, that may not seem so bad to you but, when you realize you’re spending $50 a week, the financial impact is more clear. Things seem even more wasteful when you do the math and realize that $50 a week is about $200 per month and $2,500 a year! What if you put that money towards savings or credit card payments?
It turns out that the average American is spending even more than that, and forking out about $3,000 per year eating out, according to a 2017 report form the U.S. Bureau of Labor Statistics. This is actually nearly half the average American’s food budget.
Little Charges Can Be a Big Expense
Also, pay special attention to all of those “tiny” $9.99 to $15.99 charges that show up every month. This includes Amazon Prime, Spotify, Netflix or even MeUndies and the Dollar Shave Club.
When you add them all up, how much do you think you’re spending? The average person thinks they’re paying about $79.74 per month when given 10 seconds to think about it. However, after 30 seconds, the average guess is about $111.61. And when they were asked to do a category-by-category checklist, the true sum was $237.33, on average.
This is a lot more than they thought they were spending. You may be able to see how this could cause a cash shortfall every month. Is a similar situation happening to you?
Establish a Financial Safety Net
As we covered earlier, sudden and unplanned expenses may force people to have to pay their bills late. When an extra couple of hundred dollars needs to be “found,” you have to make the difficult decision of what gets paid this month and what will have to wait for the next pay period... or the one after that.
If you have money saved away in an emergency fund, that’s fantastic. But not everyone has that available. So, where do you turn?
You may consider getting a line of credit to deal with unexpected expenses. This would give you access to revolving credit, where you’re only charged fees based on what you withdraw. Having a line of credit available for emergency expenses may help you bridge the gap if you’re short on funds.
A Line of Credit to Act as a Financial Safety Net
If this is not the first payment you’ve missed recently, you may have damaged credit and have difficulties getting a line of credit from a major financial institution. However, that doesn’t mean you’re out of options.
You may consider getting a line of credit like a CreditFresh Line of Credit by CBW Bank. You can submit a request online in minutes for a Line of Credit between $500 to $2,500 to act as your financial safety net. Submitting a request won’t affect your credit score.
Talk to Someone
Despite money being a fairly universal stressor, too many people may suffer through their money problems in silence. This can cause feelings of anxiety and isolation.
Friends and family may be willing to help wherever they can. That help may not necessarily mean loaning you money. Help could come in the form of someone referring you to a great financial advisor who helped them. Or it could be them telling you about an amazing new cell phone plan that they just switched to. Or, it could simply take the form of being there for you and being a sympathetic ear in your time of need.
It never hurts to look into what type of resources are available in your area to help you manage money better. There may be not-for-profit credit counselors in most cities who can help you fully assess your financial situation, show you all of your options, and help you come up with a plan.
In any case, the last thing you want to do is be too hard on yourself, even if you’re in this situation because of overspending. This is not a reflection of who you are as a person or your value. Beating yourself up will likely only make matters worse by filling you with shame, which may keep you from reaching out for the help you may need.
You can recover from this and get back on the right financial track. You simply need to:
- Prioritize your current bills
- Set up payment arrangements elsewhere
- Establish why this happened
- Take steps to prevent this from happening again with a financial safety net
- Reach out for help
You can recover from this. And the more active you are during this process, the more you can do to prevent it from happening again.