|Terry Rigg is the editor of the Budget Stretcher Newsletter. The
Budget Stretcher Newsletter is published monthly and is loaded with
information that will save you time and money everyday. Go to
http://www.homemoneyhelp.com for more information.
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
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
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)
Cancelling subscriptions to magazines
Obtaining free or
reduced lunches for your school-age children
Increase your insurance deductibles
and remove any unnecessary coverage
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
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
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
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
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.