How To Get Ahead When You’re Behind On Bills

Have you found yourself wondering how to get ahead when you’ve gotten behind on bills?  I’m sure you’ve been stressing out about how and when you’re going to be able to catch up.  When you’ve gotten behind, it can be very difficult to get caught up, but it’s not impossible.

The main reasons for getting behind are usually because you’re overspending, you aren’t making enough money or both.  When you start on this down hill spiral, sometimes it feels impossible to pull yourself out of it, but it doesn’t have to be this way.  There are some things you can do to begin untangling your finances and get back on track to getting your life back.

*This post may contain affiliate links. For more information, see my disclosure page.

 

How To Get Ahead When You’re Behind On Bills

Step #1:  Facing The Ugly Truth

Sometimes, facing the ugly truth about your finances is the hardest part of coming to terms with the reality of your situation.  Ignoring the facts will not make them go away.  It’ll just make it worse. The only way you’re going to be able deal with this problem is to take a deep breath and face it head on.  If you are married, it’s even more important to make sure that your spouse is beside you in taking on this situation.  It’s virtually impossible to go at this alone.  If you are single, it would be a good idea to find someone who you can talk to and hold you accountable.

Step #2:  Assess Your Situation

You won’t know where to start until you know what your situation really is.  The first step to take is for you to organize your bills.  Make a list of all your creditors, how much you owe each one, how much you’re behind and what the minimum payment is.  Once you see your situation in black and white, you’ll see more clearly how to formulate a plan.

Step #3:  Stop Using Credit

I know, when you’re in a desperate situation, you do what you need to survive, but when you’re in a hole, it is imperative that you stop digging yourself deeper.  In order to turn your situation around, you’ve got to stop using credit.  You can’t make a situation better by continuing to make the same mistakes that got you here in the first place.  Breaking the cycle is the only way to change this situation.

Step #4:  Prioritize The Bills

You need to prioritize what to pay first.  It doesn’t make any sense to be behind on your mortgage/rent, but be current with Mastercard.

The most important bills that have to be paid first, no matter what, are what Dave Ramsey calls the four walls…food, shelter (including utilities), basic clothing and transportation.  As long as these are covered first, you live to fight another day.

Once you have these expenses taken care of, now you can continue to list the rest of your debts, monthly expenses and variable expenses.  Take each one and categorize it as a want or a need.  Doing this will help you when you set up your budget.  Wants will go to the bottom of the list, while the needs should be listed from most important to least.  When you get caught up with your bills, you’re going to want to take your budget a step further and prioritize your debts using the debt snowball method, which I explain in another post.

Step #6:  Make A Budget

A budget is vital for getting your finances on track.  Without one, there’s no way you’ll be able to succeed, financially.  A budget will help you track your expenses and it will help you to tell your money where to go, instead of wondering where it went.

To make a basic budget, start with your total income at the top of the page.  Next, list all of your expenses, as shown above, listing them in prioritized order.  Start subtracting each one from your income.  Doing this will help to calculate the gap between your income and expenses.

 

Step #7:  Cut Expenses

This is where you need to take a good, hard look at your spending.  When your behind on bills and trying to get caught up, it is important to stop any unnecessary spending.  Stop spending on eating out, going to coffee shops, cut the cable, etc.  You must differentiate between wants and needs.  These changes don’t have to be permanent, but are necessary if you have any hopes of getting ahead of your finances.

Step #9:  Talk To Creditors

If you’re behind on bills, it would be a good idea to call your creditors to let them know what is going on.  Many times, most will be willing to help you create a payment plan that will suit your situation and will help you get back on track to continue to pay down your debt.

Even if your not behind yet, it may be a good idea to call them, anyway.  Many times, you can get them to lower your payment and/or interest rate or even allow you to skip a month in order to get caught up.  There’s certainly no harm in asking for help.  Just make sure, before you send them any money, that you get any settlements or agreements in writing.  And never, never, never give them access to your bank account.

Step #10:  Increase Your Income

After you’ve assessed your situation, cut out all unnecessary expenses and find that your ends are still not meeting, it may be necessary to increase your income.  I know that sometimes this can be easier said than done, but it’s all about being resourceful.  If your current job isn’t bringing in enough, you may need to look into getting a better job.

If that’s not possible, then maybe take on another job, in addition to your regular one.  Working two jobs isn’t fun, but it doesn’t have to be a permanent situation.

Another option is to sell stuff.  Go through closets, cabinets and drawers.  We all have extra stuff that we really don’t need.  You might as well make the most of it.  You can sell on Ebay, Craigslist or have a garage sale.

Step #11:  Reduce Spending

Once you’ve cut what you can from your budget, now it’s time to get even more creative and see where you can trim in other areas.

The easiest and most obvious place to start would be grocery spending and utilities.  Meal planning, using coupons and planning meals around what’s on sale are great ways to save money on food.  Another great place to save money is by turning your AC temperature up and the heat temperature turned down.

In my post 85 Amazing Frugal Tips To Help You Save Money, there are also, some great ways to help you reduce spending.

Step #12:  Downsize Your Lifestyle

If you come to a point where you’ve done everything you can possibly think of to cut expense and increase income and you still find yourself in a hole, you may to seriously start thinking about downsizing.

Is your home more expensive than you can afford?  With home ownership, there’s more to it than just the mortgage payment.  There’s taxes, homeowners insurance, maintenance, HOA fees, etc.

Are you car poor?  Are you driving a car that you can’t afford?  The average car payment, in this country, is over $400 a month.  Then you tack on insurance, gas and maintenance.

Consider moving down to a smaller, more affordable version of these things.  Think how much easier life would be without a car payment or a smaller mortgage payment.

If moving isn’t an option right now, you may want to consider refinancing.  Rates are still relatively low and it may be a good way to lower your monthly payment.

Don’t Get Desperate

Whatever you do, don’t get desperate.  We all know that desperation can lead to bad decisions.  Resist the temptation of payday loans or cash advances.  Payday loans are so bad that even Google has banned payday loan ads from their website.

These loans can run into the triple digits.  There’s only one word to describe that…NUTS!  If you think your situation is bad, payday lender loans will take that bad situation and make it ten times worse.

There’s Hope

Being behind on bills is one of the most stressful experiences you may ever have to endure, but there is hope.  Once you identify why you are in this predicament, you can work towards resolving the situation.

Also remember, it’s going to take time.  Your situation didn’t happen over night and you can’t expect it to get better over night.  But with some time, some careful planning and patience, you can turn this situation around and begin setting and achieving your financial goals.

Have you ever found yourself in this situation?  What kind of advice would you offer someone that has fallen behind on bills?  I’d love to hear your comments.

Be sure to subscribe to Love To Frugal so you never miss a post!  You can also follow me on Facebook, Pinterest & Instagram for even more money saving, frugal living tips!