What to Do When You’re Struggling to Pay your Bills

The idea of not having enough money to pay the bills can be scary. It's even scarier when it's not just a once-in-a-while problem but an ongoing struggle. If you're facing this situation, don't panic. You have options. Here are some steps to take when you're struggling to pay your bills on time:

1. Make a Budget and Stick to it!

A budget will help you figure out where your money is going each month to make changes as necessary to get back on track financially. Determine exactly how much money you spend on necessities, including rent, utilities, food, and transportation. Set aside any money you have left over for emergencies or unexpected expenses.

If your income fluctuates from month to month, consider setting aside some of your income for bills before it arrives so that you’re not faced with the choice of paying rent or buying groceries. It's important because it helps prevent further debt and gives you peace of mind knowing that you won't run out of money before your next payday rolls around!

2. Consider Working with a Credit Counseling Agency or Debt Management Plan (DMP)

If you need help paying bills, there are many organizations and counseling services that offer help to those struggling financially. Credit counseling agencies can help you create a budget and manage your debts by guiding negotiating payment plans with creditors and assisting with debt consolidation loans. They may also be able to connect you with legal aid if there are legal issues involved in your situation (such as an eviction notice).

A DMP is an option for people who want help getting out of debt without filing for bankruptcy protection but can’t afford to pay their creditors in full immediately. Creditors are required by law to accept payments from DMPs on behalf of consumers once they enroll in one of these programs; however, consumers must understand that enrolling in a DMP will not remove negative information from their credit report.

3. Stop Using Credit Cards

As tempting as it may be, don't use credit cards if you can't afford to pay off the monthly balance. Using them only makes it harder for you to keep up with payments and could lead to more debt. Consolidate your debts into one loan or line of credit so that all of your payments go toward one account instead of several different accounts with different deadlines and interest rates.

This can make budgeting easier because you'll only have one bill per month instead of several different ones coming due at various times throughout the month. Consolidating debt can also lower interest rates on your accounts at once, saving money in the long run. If you can't live without them, set up a payment plan with a credit card company or use a debit card instead.

4. Contact your Creditors and Ask for a Payment Arrangement

If you owe money on credit cards or lines of credit and have no other way of paying it back, contact the card issuer and ask for a payment arrangement. The creditor may be willing to spread out your payments over time, lowering the interest you pay and helping you avoid penalties. Some creditors have programs that help individuals who have trouble making payments.

For example, some auto loan lenders offer low-interest loans that allow borrowers to defer payments for up to six months (or longer) to get back on their feet financially. Other creditors may be willing to work out a payment plan with you — for example, if you're behind on credit card bills but have enough income coming in each month to make minimum payments, they may let you make smaller monthly payments until the balance reaches zero or falls below $100 (the amount of credit card debt allowed by most issuers).

5. Pay What you can Afford Each Month and Avoid Unnecessary Things

Even though it may not seem like much, paying something is better than nothing. If you aren't sure how much to pay, contact the creditor or creditor representative and ask what would be considered reasonable under the circumstances.

If you're spending more money than you earn, you need to find ways to reduce your expenses. The easiest way to do this is by cutting back on discretionary spending. Cut back on eating out and entertainment, cancel memberships or subscriptions that aren't necessary, and stop using credit cards until you can get out of debt.

As you can see, a little flexibility and forward thinking will go a long way in getting your finances back on track. The good news is that there are a lot of things that you can do to avoid falling behind on your bills. Try some of the suggestions above, and then take these steps to keep your finances strong.