We’ve all had a moment like this: It’s the end of the month, your bills are coming due, and you’re just not quite sure you’ll have enough to cover everything. You might be freaking out a little (understandably), but it’s not necessarily time to panic. Even if you come up a little bit short, there are things you can do to manage the situation and prevent a full-blown debt disaster.
Here are some tips on what to do if you can’t pay a bill: prioritize your debts and bills, negotiate with creditors and get your finances back on solid ground.
1. Prioritize Expenses Essential for Survival
The first step to debt relief is determining what’s most important to pay. That way, you’ll know which bills you can afford and which you might have to put off for later. First and foremost, prioritize expenses that are essential for survival, like your mortgage payment, power and water bills and food. Second, look to put payments toward secured debt, which is any loan that requires collateral to get approved. This includes auto and home equity loans. The debt that should be tackled last is unsecured debt, like credit card bills, service-related bills and personal loans. Remember, just because they’re last priority doesn’t mean they are not important, so continue to pay what you can. If you can’t cover the full cost of a bill, just pay as much as you can toward it.
2. Contact Creditors
As soon as you realize you will have late payments this month, get in touch with your creditors and service providers to keep them in the loop. You may be able to negotiate receiving an extension, setting up a repayment plan or switching to a new plan. They will be a lot more willing to work with you if you’ve given them a heads up versus letting them know the day a bill comes due. Never ignore your bills, as that can result in cancelled service or even foreclosure.
3. Review Your Budget and Find Ways to Cut Costs
The final step to getting ahead of your debt is to reassess your financial situation. Review your budget and spending habits in order to see where your spending might be getting out of hand. A few ways to cut costs are by cancelling subscriptions, downgrading your phone plan or ditching cable. Need help keeping track of your budget? We have a budget spreadsheet you can use. Get help making your plan by scheduling a meeting with a Summit financial expert and stay on top of your bills and savings goals.
Stressing over your bills is just that — stressful — but by prioritizing debt and working with your creditors, you can help mitigate the damage and get back on track faster. When in doubt, we’re always happy to help you sort things out. Just give us a call.