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Here’s What to Do When You’re Behind on Bills
Being behind on bills, getting notices in the mail, and receiving collector calls is one of the most helpless feelings in the world. I’ve been there. I’ve even been through bankruptcy. Let’s help you avoid that route.
#1. Damage Control With Credit Cards
If you’re buried under credit card debt, do your best to stop using cards immediately if you can. I realize some people need them for groceries when the money is really tight…I’ve been there too.
If your credit is not yet affected by late payments, try applying for Discover Card’s Discover it cash back credit card. If you transfer your highest balance or two to their card, you’ll have zero interest to pay for 18 months.
If you don’t qualify for the Discover card, find a few other zero interest balance transfer cards and apply. Chances are, you’ll qualify for one of them. Don’t give up.
There’s a transfer fee, but you’ll save a bundle on future interest payments if your balances are high to begin with. The Discover card also comes with no yearly fee.
A call to your credit card company could also help. You may be able to negotiate a lower minimum payment for a while and rearrange your monthly payment date to fit your monthly budgeting needs.
Ultimately, you’ll want to transition away from credit cards to using only debit or cash until you’ve caught up on all debt and payments.
#2. Car Payment Deferment
If you have car payments and you’ve fallen behind, there is help available. You can talk with your lender about possibly deferring your payments (they’ll be added to the back end of your loan).
You may have to pay the interest portion of your monthly payment, but it will be much cheaper than the full monthly bill. If deferment isn’t allowed, be honest with the lender and ask for a temporary decrease in your payment while you try to catch up.
Extra Tip: If you own a high-demand car like a Honda or Toyota that holds its value on the used market, consider selling it for the top asking price of similar models on Craigslist or other used car platforms.
I sold a Toyota Highlander with over 200k miles for $5000 cash a couple years ago. You’d be surprised what you can make on popular makes and models.
If you don’t owe much on your loan, this tactic may be a good way to pay off the car. How great would it feel to let go of a monthly car payment?
If there’s leftover cash after the loan payoff, invest in an older car that runs well. If you’re short on the needed funds, consider doing a fundraiser or asking a family member for temporary help with the difference.
Public transportation, carpooling, rideshares, and temporarily sharing a car with your partner (if you have one) are other options that may work in a pinch.
#3. Making Your House Payment
Whether you rent or own your home, your biggest bill is the house payment. Don’t risk ruining your credit, being evicted, or foreclosing on your house; speak up and ask for help. If you have a landlord, call them and ask for temporary help.
If you own your home, call the mortgage company and explain your situation. Let them know you’re willing to do anything to keep your house and get current on payments. They may be able to offer any or all of the following options.
- Forbearance: A temporary agreement between you and the mortgage company to suspend or lower your monthly payments for an agreed-upon period of time. This is a good option for when you know you will miss payments and want to contact them ahead of time.
- Repayment Plan: This works when you’ve already missed some payments and need immediate help so you don’t lose your house or trash your credit. The lender adds a portion of your overdue amount to each monthly payment for a certain amount of months until you catch up.
- Loan Modification: This is a more permanent solution if your financial hardship is not short-term. Your lender may be able to help restructure the terms of your mortgage such as length of loan, interest rate, and monthly payment. If you don’t qualify for a refinance, this may be a great solution so you don’t lose your home.
- Refinance the Loan: If you aren’t behind on your payments yet, but you know a financial hardship is looming, look into refinancing your home. You do have to qualify with some credit checking, income reporting etc., but it could be the perfect answer to lowering your monthly payment.
#4. Help With Utility Bills
If you’ve been receiving notices about your utilities being shut off, or you’re a payment behind, call your utility company right away. Explain the temporary hardship, and ask if they offer a budget billing plan where you pay a flat fee each month to make the monthly bill more predictable. You may also ask if they have a program to help low-income families. Our local utility company offers this.
Since most utility companies charge for what you use, asking for a flat-fee bill may help with monthly budgeting during a financial crisis. Winter and summer utilities can fluctuate quite a bit depending on the climate you’re in.
Flat-rate billing could spread the bill out more evenly and make those higher-usage months more affordable. Just be aware that at year’s end, you may owe some money if your usage went a bit over what the flat-rate billing was.
#5. Ask for a Lower Cell Phone and Internet Bill
I’ve done this many times. As a single mom, the cell phone bill for me and four teens was out of control a few years ago. I called T-Mobile, asked about current promotions, and they switched me to their latest deal (which included more data). I saved at least $30 a month.
Now there are services like Ting, where you pay only for what you use! I highly recommend checking them out. Ting’s service is only $6 per line, and you’re charged for calls, texts, and data you’ve actually used each month. The average bill for their users is only $23 per month.
**Click here to take advantage of the $25 credit Ting offers each new customer! That could cover your first month! You can even bring your own phone and number.
You can also ask for the latest promotional pricing from your internet service provider. I do this at least once a year and often get a special deal that’s lower than what I’m currently paying. Sometimes you’ll get bumped up to a higher speed AND pay less. Very cool.
#6. Cutting Out What You Don’t Need
This is the most obvious action to take when you’re behind on payments and need to catch up. If you’re still using cable and expensive extra sports packages, consider an alternative for a while.
Save Big Money on TV
If you don’t have a gaming console with streaming capabilities, like a PS4, make a one-time purchase of a Roku box that connects to your TV. Roku players are the pioneers of television streaming.
Roku allows you to access your Netflix, Hulu, and Amazon Prime accounts (and dozens more) to watch on your TV. Roku boxes have NO MONTHLY FEES and only cost $30 for the basic model.
Click Here to see Roku’s hundreds of FREE channels!! You’ll also have access to their Channel Store where you can purchase HBO, Spotify, and many others.
Another option is to make a one-time purchase on an indoor long-range TV antenna for basic high definition channels. Click Here to find the best models on Amazon for a really affordable price.
Other Spending Cuts
Other temporary spending cuts could include manicures, pet grooming, take-out food, and expensive car washes — things you could do yourself. Avoid the mindset of feeling deprived, and be proud of every little bit that goes into getting you out of the hole.
If you eliminate unnecessary spending for a short time, you will find extra cash you desperately need for paying down your debt or getting current on other payments. The burden that’s lifted far outweighs the temporary inconvenience — I promise.
#7. Sell What You Don’t Need
Do you have unused gift cards hanging around? Clothes with tags still on, or gaming consoles that are no longer in use? SELL THAT STUFF.
Decluttr will offer you a cash price for practically anything you have lying around…cell phones, games, books, technology etc. They even pay you the day after your items arrive!
#8. Help With Student Loan Payments
Student loan debt is crushing when you’re already behind on bills. Talk to your loan institution right away to inform them of your financial situation. If there’s been a job loss, many times they can adjust your payments based on what income, if any, you’re currently bringing in.
Chances are, when you took out your loan, you were placed in the “Standard Repayment Plan” category. Check your status right away if you can’t afford your payments, and ask for payment options based on your actual income.
You can also talk with your lender about a temporary deferment of payments until you get back on your feet. Most institutions would much rather help out than have you default on your loan.
- PAYE is a pay as you earn plan that’s worth applying for
- There is IBR which is also an Income-Based Repayment plan
- The ICR plan, Income-Contingent Repayment plan is another option
#9. Better Budgeting
Sticking to budgets can be tough. The word itself has a negative vibe to it, and can produce feelings of failure or deprivation. It doesn’t have to be that way.
Creating a “spending plan” puts a positive spin on budgeting. This simply means you’re in charge of your money and where it goes. You get to prioritize the direction of your hard-earned cash and feel more in control.
Necessary spending — as mentioned earlier — includes various loans, credit card debt, house payments, and utilities. You don’t have as much control over where that cash flows each month. But you can follow some of the tips and find temporary relief while you catch up financially.
A spending plan especially helps with directing money towards things you can control. These are things like gas, groceries, eating out, kids’ sports and activities etc.
Write down every monthly expenditure that fluctuates or isn’t absolutely necessary, and look closely at the total. Are you surprised by what you see? Is your grocery spending higher than you thought?
A Cash Envelope System That Doesn’t Require Cash
Cash envelope systems are great for tracking your spending. Many people hate them because it’s a pain in the butt to carry cash all the time.
I highly recommend the Cashless Cash Envelope system. It helps track your spending and doesn’t require cash. How cool is that!?
The Cashless Cash Envelope system, created by Tracie Fobes over at Penny Pinchin’ Mom, is the perfect fit for those of us who want to keep it simple and pay with debit cards. For only $2.99, you get these amazing templates that cover every spending category you can think of.
Click HERE to get the Cash Envelope Printables — they will make your money tracking fun and efficient!
Saving Even Further
Look at your gas bill and see if you can cut back by combining errands with your appointments or weekly scheduled outings. Try to arrange carpools for kids’ activities or trips to and from school. If you work close enough to bike, save by challenging yourself with extra exercise once a week.
Check your car insurance! If you haven’t compared your car insurance with the competitors lately, you could be spending way too much. Call GEICO, Safeco, MetroMile (pay per mile insurance), or the company you use for homeowners or renters insurance, and see if they offer a bundled deal.
Involve Your Kids
Evaluate what you spend on expensive kids’ activities. This one’s very hard –we don’t want to “deprive” our kids of things we think they need and enjoy.
But think of what you’re modeling for them when you continue to spend $300 per month on hockey, or $175 per month on cheerleading lessons when you’re already up to your eyeballs in debt.
Have a family discussion about how EVERYONE can pitch in to help while you’re in financial crisis. You can emphasize that it is temporary, but it’s a great lesson for your children’s future money management practices.
#10. Earn Extra Money
There are hundreds of ways to earn extra cash in your spare time with paid projects or by renting out your stuff.
Make Money with Your House and Car
Airbnb is now famous for its disruption of the hotel industry, for good reason. If you need some fast cash, consider renting out a spare room or finished basement on occasion. This pays particularly well if you live in a high tourism area or near a large city where people travel often for business.
Renting out a room (or your whole place) is easier for singles or couples without kids. There are many people who occasionally rent out their place with Airbnb for the weekend and arrange to stay with friends or family.
Airbnb doesn’t have to be a permanent earning solution — and the beauty of it is you only rent out your place when it’s convenient for YOU. If you choose to rent your place while you’re vacationing for several days, you could earn hundreds of dollars with Airbnb.
Along those same lines, do you know about Turo? It’s the same concept as Airbnb, but with car rentals. I absolutely love Turo and have rented with them the last three trips I’ve taken. You save a TON of money! You can either rent a car from them OR list your car and make some cash.
If you register your car with Turo, it’s listed on the website where prospective renters can peruse your listing. You’re in complete control of when and how often you rent it out, and you get to set the price point.
If renting your car with Turo worries you, never fear — your car is covered for up to one million dollars in damages and Turo offers roadside assistance with its service.
So, if your car is just sitting in the driveway over the weekend or while you’re away on vacation, click here to put your car to work for you! You could end up with a few hundred more bucks in your pocket by doing absolutely nothing…talk about passive income.
Earn Money Doing Small Tasks in Your Spare Time
Most people have heard of Fiverr, the platform that offers services of every kind for very affordable prices. What you may not know is you can also earn money by listing a service on Fiverr.
If you can offer virtual assistant skills, proofreading, graphic design, logo design, helping people with WordPress…or a million other things, then get set up on Fiverr and make a bit of extra cash. You could earn $50 today!
There are at least a dozen other sites where you can complete small or large projects for pay. Check out Fancy Hands and EasyShift also. Learn more with “18 Short Task Sites for Making Money from Home”over at The Work at Home Woman.
It is my sincere hope that you benefit from some of these tips when you’re behind on your bills. Keep your chin up, and take baby steps. Each small step in the right direction will make you feel better and more in control of your money.
Please share this post to help others! Let me know how it goes…we love success stories! It encourages others as well.
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