Falling behind on your bills can also impact many areas of your financial life. It may lead to:
- Late fees
- Interest charges
- High interest rates when you need a loan later on
- A damaged credit score and credit report
- Non-stop calls from collection agencies
- Bills piling on bills piling on bills
You may have fallen behind on your bills due to many different reasons. You could have recently lost your job, taken a pay cut, or had surprise expenses pop up.
Whatever your reason may be, there are steps you can take to get back on track.
Here are my tips on what to do when you can’t pay your bills.
Don’t ignore the problem.
Ignoring the problem isn’t going to help you at all. Many people get extremely stressed about being unable to pay their bills, which can lead to completely ignoring the problem in hopes that it will go away.
You have to do something.
By facing the problem, you will be able to dig yourself out of debt, get rid of late bills, and have a better grasp of your financial situation.
Try to relax when figuring out what to do when you can’t pay your bills.
You may feel very panicky if you can’t pay your bills, but remember that wasting time on worrying won’t help you at all.
Being negative, panicky, regretful, etc. leads to feeling as if you will never get out of the mess you are in. Those feelings may cause you to give up and let the bills pile up, because you can’t see a way out.
Instead, you need to take action.
Try to relax, stay positive, and focus on making changes.
Call the company.
Call the company as soon as you can. By calling them, you may be able to have late fees waived, receive a discount, and/or get more time to pay your bills.
You won’t know what they can do for you until you ask.
The worst thing that can happen is that they say no.
The best thing that can happen is they say yes and help you out!
And, yes, some companies will help you out. They aren’t all out to get you. You may want to try explaining your situation, to tell them how great of a customer you’ve been over the years, to ask what your options are, and so on.
Evaluate your income and spending.
You need to get organized so you know exactly where your money is coming from and where it is going.
This will help you spot your financial problems, and see whether working towards earning more money or cutting expenses is a better use of your time. By finding expenses to cut or areas to make more money, you will be able to put more money towards your bills and savings which can help you work through the bills you need to pay.
Related: How to Live On One Income
Cut your expenses as much as you can.
Even if it seems like there is nothing to cut from your budget, by digging deeply you can probably find a spot you can cut.
Something needs to be done so that you are no longer behind on your bills.
You may want to consider completely cutting expenses related to your:
- Monthly car payment
- Any memberships or subscriptions
- Entertainment (there are plenty of ways to have free fun!)
- Eating at restaurants
You may want to consider lowering or negotiating expenses related to your:
- Car, home, or other insurance
- Cell phone (you may even want to cut this completely)
- Utility bills
Related: 30 Ways To Save Money Each Month
Increase your income.
My recommendation for the best way to pay your past bills is to work on making more money. There is really no limit to the amount of money you can make. Earning more money can be a great way to get ahead a little more quickly than if you were to just cut your budget (you should still do that too, though).
To make extra money you can find a part-time job, ask for a raise or additional hours at the job you already have, start a side business, and so on.
Related: 75+ Ways To Make Extra Money
Think carefully about extreme options.
Some people put everything on their credit cards or take out payday loans when they are having a hard time paying their bills.
This can be a huge mistake. Occasionally there is a positive story about someone able to use one of these methods to their advantage, but the average person will experience a lot of money lost and increased stress.
Using a payday loan or credit cards when you fall behind on your bills can lead to digging a hole that feels nearly impossible to get out of.
I recommend analyzing the other options listed in this blog post before taking any extreme options.
Prioritize your bills.
One of the most important steps is deciding what order you should pay your bills.
You should write (or type) out all of the bills you owe, how much you owe, how late you are, and negatives that you may experience if you don’t pay a bill.
This will help you with the next action you will need to take.
Pay off your bills.
I couldn’t forget this one. Actually paying your bills is what you are working towards and what you will eventually need to do.
I recommend finding the bill that’s going to impact you the worst, then pay that one first. Then, go down the list you made prioritizing each, then pay each one off as described above. Keep paying your bills until you are done.
Prepare for the future.
You should make a plan so you don’t fall behind on your bills again.
Without a plan, there is a chance you will fall into the same habits again and again, possibly getting yourself into an even bigger financial mess.
- Start an emergency fund
- Stay organized with your bills
- Create a budget
- Set reminders on your phone or calendar for bill due dates
- Earn more than you spend
- Much, much more
What other tips would you give to someone who is wondering what to do when you can’t pay your bills?