Are you scared, worried, unsure of what to do, frustrated, embarrassed and humiliated because you can’t pay your bills and put food on the table?
What happened? Did you lose your job? Maybe you are sick or hurt and can’t work. Did an unexpected expense rip your finances to shreds? Maybe you just used those credit cards too much or bought a house that was more than you could really afford.
Whatever the reason you are experiencing Big Money Problems, you have to know that for each and every problem, there is a solution. Notice I didn’t say an Easy Solution.
If you have hit on hard times, you are going to work very hard to find and implement that solution. You are going to do things that you don’t want to do and give up things you want to keep. Your pride is going to suffer in the process.
But you have to do something to solve the problem. And, quite frankly, most people never think it can happen to them so they aren’t prepared. When Big Money Problems hit, they don’t have a clue where to start.
There are many actions that you need to take if you find you can’t pay all of your bills. Below is a list of the most important:
Sit down and evaluate your current situation.
Determine how much money you are going to have and what your bills and expenses are. If you have more bills than you have money coming in, you need to take action fast.
Take a hard look at all of your expenses to see where you can cut back.
You may have to be brutal and cut out things you would like to keep, but this is necessary to provide the basic needs of your family. The most obvious and the ones that can produce immediate savings are:
Phone (cell and land line)
Cable or satellite
Cancelling subscriptions to magazines
Obtaining free or reduced lunches for your school-age children
Increase your insurance deductibles and remove any unnecessary coverage
Quit dining out
Your next action would be to determine if there is anything that you could sell or cash in that may bring in some needed income.
Here is a list of some of these actions:
Borrow from your 401k
Sell a second car or boat
Cash in life insurance policies
Collect unpaid debts owed to you by friends and family
Cash in any Cds, investments, etc.
Sell jewelry and other valuables
Now that you have cut your expenses and sold or cashed in what you can, it’s time to make a monthly payment plan. If you don’t have enough money to cover everything, it is very important that you set your priorities to make sure the most important expenses are covered. Using the below priority list is mandatory if you want to make sure you financial problems don’t escalate:
Priority 1 – Food
Make sure you have enough food for your family. If you lost all of your income, you will have to apply for Food Stamps or a similar program through your state’s Department of Social Services. This will include any necessary prescriptions and other health items. It may be necessary to apply for Food Stamps to make sure you have enough food to sustain your family.
Priority 2 – Shelter
After food, you need to make sure your family has a place to live. If you have only enough income that you can use to cover food and shelter, use it for that alone. If you lost all of your income, apply for government assistance to help, or consider moving into less expensive housing. After you cover your house payment or rent, pay your utilities.
Priority 3 – Other Necessities
You may need your car to look for employment, so consider making your car payment and put back money for gas. You may also need your phone, so keep at least the basic service.
Priority 4 – Important Loans
If you have any money remaining after the items listed in the first three priorities, you should pay any other bills that may be necessary to allow you to accomplish what needs to be done to keep you going.
With any money you may have after covering the above priorities, you can distribute it between your other bills such as credit cards, phone bills, etc.
If you see that you are going to be late on any of your payments, call the creditor immediately. Don’t wait for them to call you. Many companies have programs established that can help you by delaying payments or adding them to the end of your contract. Check to see if you have taken out the insurance that covers loss of income. Make sure to do exactly what you agreed to do with your creditors, or let them know why you can’t.
Of course, the action that is most important is to start looking for a regular income. If you need a job, then understand that you may have to take one that you really don’t like. If you can’t pay your bills, then you can’t be picky.
When you are late on your payments, you are going to start receiving phone calls from your creditors. Work with them, but don’t let them take advantage of you or threaten you. Under federal law, you have rights as a consumer. Please read my article, Your Consumer Rights, to learn your rights.
It’s also important that you learn from this experience so that when you are back on your feet, you know what you have to do to keep it from happening again.
If you find yourself experiencing Big Money Problems, get organized, don’t let your emotions cloud your judgment, do what you say you are going to do, and be willing to do what it takes to solve the problem. The odds are good that there will be better days ahead.