Sometimes things happen in life that cause you to fall behind on bills. If this has happened to you, you are not alone. There are many reasons why a person could fall behind on bills.
Especially with everything going on in the world today, a lot of people have lost their jobs or have experienced some type of emergency that causes their bank account to drain out.
Once you start getting behind on bills, it can be very hard to catch up on bills. You’ll start seeing late payment fees, interest, and even overdraft fees.
These extra fees will just pile on top of your debt and past due balances.
Whatever the reason may be of why you are behind on your bills, there are 7 tips you do to get your finances back on track.
All you need is a plan to help you to get caught up on bills when you are behind and struggling.
MAKE A LIST OF YOUR BILLS
When you are behind on your bills, the very first thing you should do is make a list of all your bills. I suggest creating an excel sheet so you can organize your bills with the following:
- Company name
- Due Date
- Past Due Amount
- Normal Monthly Payment
- Total Balance Due
If you have bills that are billed based on usage, look at the last 12 months to figure out a monthly average for your normal monthly payment.
Your list of bills will probably include things such as:
- Mortgage or rent
- Utilities bills such as; Water, Gas/Oil/Propane, Cell phone, Internet, cable, etc.
- Loans such as student loans, car loans, etc.
- Credit Card bills
- Insurance bills
- Medical bills
- Subscriptions and Memberships
Make sure you include everything on your list, even if it’s something that gets paid every 3 months. You want to account for everything so you can get your spending under control.
PRIORITIZE YOUR BILLS
When you are behind on bills, you need to focus on your spending and see where you can cut back. But before you can focus on your spending, you need to prioritize your bills.
Now look at the list that you just created and rank the BASIC ESSENTIALS at the top.
These are the things that you MUST have in order to live. It should include things like your mortgage/rent payments and your utilities. These are the items you need to pay now.
Next, you want to rank the rest of the your bills from most important to least important.
You want to figure out what bills you need to pay now, what bills can wait a littler longer to pay, and what bills you can get rid of all together.
You may have subscriptions or memberships like cable, Hulu, Netflix, Amazon Prime, or gym memberships.
Since your main objective is to get caught up on bills, you will want to make some sacrifices and stop these subscriptions and memberships for the time being.
Once you get caught up, you can subscribe to these again.
Don’t worry, you can still find ways to watch T.V. when you cut cable and you can work out at home while you are getting your finances back on track
EVALUATE YOUR EXPENSES
After you have ranked your bills and cut out any unnecessary bills, it’s time to look at your expenses. You want to make sure you do not have a negative cash flow.
Look at the amount you spend for a typical month. This may include things such as:
- Eating out
- Hair and Nails
Don’t forget to look at your bank account for any recurring subscriptions, such as apps, that you may have forgotten.
You want to determine which expenses are essential and which expenses are non-essential.
Be honest with what is a need and a want.
You want to find things you can cut out completely and other things you can cut back on. You won’t need to cut these things out forever, just for a little while so you can get your finances on track.
Since many of these expenses are not fixed expenses, this is where you can find ways to save money.
If you notice you are spending a lot of money by going out to eat, getting your hair and nails done, alcohol and entertainment, then you need to cut back on these items so you can get caught up on bills.
Plan out your meals so you can eat at home and not at restaurants. Cut back on entertainment and try going longer between hair and nail appointments. And stop making impulse purchases.
Anywhere you can cut back on your spending will allow you to put the money towards your bills.
Remember this isn’t going to be a forever plan, it’s just a plan to help you when you are behind on bills.
Once you figured out where you can cut back, tally up how much money you will need for these types of spending.
MAKE A BUDGET
Once you have figured out what you need to pay for your bills and expenses, the next step is making a budget.
A budget is a plan for your money where you track your income and expenses. It will help you to realign your spending so you can get your bills back on track and reach your financial goals.
HOW TO MAKE A BUDGET
- First you want to add up all of your income that you receive a month. This may include multiple paychecks, child support, unemployment, sidehustles, etc.
- Next, you want to add up your spending. This will include all your bills and your expenses (after you cut out and lowered your spending).
- Now you want to subtract your spending from your income.
You want to make sure you are making more than you are spending.
If you are spending more money than you are making, you need to go back and take a deeper look at your expenses and find ways where you can cut even more costs.
You want to make sure you are making more money than you are spending. When you are making more than you spend, you can then put the excess number towards other bills and debt you have.
If you can’t find ways to cut back your spending, then you need to find other ways to save money.
NEGOITATE YOUR BILLS
If you are behind on any payments, you want to find a way to get back on track. Sometimes this means negotiating your bills.
So don’t be afraid to call your creditors. They want you to pay on time so many times they will work with you if you can’t pay your bills.
They can help by setting up a payment plan. So don’t ignore your bills- CALL THEM and BE HONEST.
Ask them if they can work with you on a payment plan so you can have lower payment amounts.
So if you are behind on bills, don’t be afraid to call any company that you have past due bills with. You will be surprised how many of them will set up a payment plan to help you get back on track with your finances.
This goes for credit card companies, utility companies, and even mortgage companies. I’m sure there are more, so don’t hesitant to call your bill to company.
FIND WAYS TO MAKE MORE MONEY
Once you have figured out your budget and called your creditors for help, you can also find ways to make more money so you can get all your bills back on track.
While you may be working 1 or even 2 jobs already, there are things you can do in your spare time to make money.
I have found 12 ways to make an extra $1000 a month. These money-making ideas can help you to make extra money so you can pay down your debt, get control of your finances, and avoid falling behind on bills again.
WHAT TO DO WHEN YOU GET CAUGHT UP ON BILLS
Once you start paying off your past due balances and able to pay down some of your debt, you are going to want to put together another budget. This will help you to keep your finances on track.
Your new budget should still include your income, all your expenses, and your bills. Once you start getting rid of past due balances and getting rid of your debt, such as credit card balances, you may notice you’ll have some extra money left over.
So you’ll want to include a new line on your budget for savings.
Since you are still working on getting your finances back on track, you will want to keep your spending low. This way you can start saving some money. Having a savings account will be helpful so you won’t get behind on bills again.
You’ll want to save what you can afford. This could mean $10, $20 or more a week.
You will want to be consistent with putting money away every single week, just make sure the amount fits in with your budget. Put the money in a savings account so you can start earning interest on it.
What to do when you are behind on bills
When you are behind on your bills, it can be a very tough situation. It can cause anxiety, stress, and make you irritable with your family.
So you’ll want to address your financial situation right away. You can’t ignore your bills because they will just keep getting bigger.
These 7 tips I outlined above are designed to help you act right away before your debt gets even more out of control.
If you have been behind on bills, what steps did you take to get your finance back on track? Leave a comment and let me know.