Falling behind on bills. It’s happened to all of us at least once, and happens to many of us more often than we’d like to admit. Whether it’s a spending problem, an income problem, a budgeting problem, or just a LIFE problem, it happens. And we hardly ever talk about it, probably because it’s embarrassing and we don’t want to admit it… but burying your head in the sand does nothing but make the problem much, much worse.
There’s no judgement here. I’ve been there, and I know it’s a hard situation to unravel. This is an embarrassment-free, judgement-free guide on pulling yourself out of the hole – and staying there.
What to do when you’re behind on bills:
Step 1: Assess Exactly What You Owe
This is where you have to log in to every account and write down exactly what you owe and to whom. It can be a scary step, especially if you’ve been avoiding it.
Regardless, it’s essential that you know EXACTLY what the situation is, so do that now. Don’t panic.
Next, you need to rank these in order of importance. Shelter should always be at the top of your list – you need to keep a roof over your head above all else. If you live in an extremely cold or hot climate, heating/cooling should rank directly below shelter, for example. Decide what your top priorities are, and make sure those take up the first spots on your list.
Following your immediate needs on the list should be the bills that are overdue the most, again ranked in order of how important they are. Credit experts might hate me for saying this, but credit card bills and medical bills are not a pressing necessity when your water or heat is in danger of being shut off (although of course you should always be making your best effort to pay those as well!)
So your list should look something like this:
- Rank 1: Rent or mortgage – shelter for your family should always come first
- Rank 2: Pressing needs (food, heat, water)
- Rank 3: Secondary bills that are overdue
- Rank 4: Least importance, bills that are coming up but aren’t overdue yet
(I advise you to keep your Needs ranked at the top of the list even if they’re not overdue; if you’re in good standing with these companies, it’s worth it to stay there. There’s no point in paying late fees on an otherwise caught up account just to pay late fees on one that’s already behind).
Once your list is written out and in front of you, go over it with an objective eye. Don’t get emotional. Don’t panic. It can seem really overwhelming, but letting it stress you out isn’t going to get anything done.
Going through your list, make a mental note (or an actual note, right on the list) of how much of this you can afford to pay upfront, and how much you can pay later.
Step 2: Get on a payment schedule
Going down your list (in order of importance), you’re going to call each company and request to make a payment arrangement.
Be honest with them about how much you can afford. You figured this out for yourself in step 1, so you know what’s there and what isn’t, and you know where your highest priorities are.
Some companies will let you set a custom payment arrangement as long as the balance gets paid, while some will only allow an arrangement in two equal parts, and others want a payment made that day as a “good faith payment”. Don’t let someone talk you into making an arrangement you can’t afford to keep – no matter how pushy they are about it. Not being able to keep a payment arrangement can push you directly into default, so it’s important that you don’t just agree to a promise you can’t keep.
Your goal here is to let them know that you know you’re behind, that you WILL pay, and that you’re making the effort to keep your account in good standing. Companies MUCH prefer you call and make an arrangement rather than just not pay your bill, as it shows you know you owe the money and that you do intend to pay. They’re likely to be willing to work with you.
If there are extreme circumstances surrounding your situation – like a sudden job loss, disability, or loss of a loved one – let them know. Many companies have compassionate plans in place to reduce the overall amount you owe or defer payment entirely for a month or so while you get back on your feet. Be sure to ask if there’s anything they can do that would apply to your situation. Even just a temporarily lowered interest rate or deferred late fee can be helpful.
Step 3: Cut back other expenses
There’s two reasons you’ll need to tighten your belt going forward now. You already know the first one – you have to pay these bills back. Whether you’re a month behind on one bill, multiple months behind on multiple bills, or not behind yet but will be in a week’s time, for whatever reason, your cash flow right now is threatened. This is not the month for a surprise impulse purchase. You already know that.
The second reason is the cold hard truth: This situation is a wake up call that your current lifestyle is not sustainable.
Remember, this is a judgement-free zone. I’m not trying to make you feel ashamed of your situation if you’re here because you made mistakes, or defensive if you’re here because something completely out of your control happened. What’s important is that you’re here, we’re trying to tackle it. In order to do that we need to be honest: If you’re falling behind on bills, then you’re going to have to take a temporary lifestyle cut until you get caught up.
Step 4: Find a Temporary Income if Needed
This can be a lifesaver to help you get back on your feet faster instead of getting stuck in the loop of leapfrogging bills month to month. An influx of extra cash, even a small one, upfront can save you an extra month or two down the road of payment arrangements – half of the battle when you’re behind on bills is the extra money owed through interest and late fees and, worst of all, NSF charges if it comes to that. You can stave off a lot of pain later by getting your hands on some extra cash now.
You can start looking around for part-time, weekend or evening jobs. Or look into driving for services like Uber, Lyft, or Doordash. Now might be a great time to declutter your home and sell some things you don’t need in the secondhand economy.
Call your friends and neighbors and let them know for the next few weeks you’re looking to babysit or walk dogs at competitive rates. It can be super helpful actually to think like a high schooler here: When kids face obstacles to traditional employment but need to make extra cash, what do they do? They get creative. They hold yard sales, buy candy in bulk and resell it at school, and shovel driveways. Don’t be embarrassed to go door to with a shovel in hand. There’s no shame in the hustle game, babe!
This is going to do two things for you: First, you’re going to make a little extra you can put towards those debts. But the second, and maybe even more important benefit, is this is going to raise your self esteem back up. Falling behind on bills can do a number on your self-image, and it’s easy to get caught up in a poverty mindset when things get tough and stay there for a long time. By proving to yourself that when push comes to shove, you have what it takes to pull through, you’re keeping that self-image high, and you’re in a better mental position (and financial position!) to be able to pull through this.
Because you will pull through this. Getting behind on bills is a temporary situation. It’s not going to last forever, and it IS overcome-able (that’s a word now).
So take a deep breath, get out your pen and paper. You absolutely can figure this out.