Budgeting When You’re Behind on Payments
by Elizabeth S.
Falling behind on payments is a common problem that affects millions of people each year. Although this situation can be daunting, there are several proactive steps you can take to come back out on top and take charge of your finances again.
Make a List
The first thing you need to do is make an actual list of what your payments are so that you have a clear picture of what you’re dealing with. Using either a spreadsheet or notebook, compile a clear list of all your monthly payments, what day they are due, and how much they are. In regard to things like utilities, be sure to write down what the possible cutoff dates are for each – you’ll need this information later.
Make a Budget and Stick to It
Your next step is to come up with a feasible budget that you can stick to until you’re all caught up. The first step is identifying what your current income is each month. Once you have that figured out, you’ll need to review your variable expenses over the last two or three months to come up with an average of what you’re spending.
To do this, go through your bank account activity to see what you spend on things like eating out, groceries, gas, leisure activities, etc. Add it all up for each category and divide by the number of months you added up to create an average. For instance, if you spent $200 on groceries one month and $300 the previous month, the average would be $250 per month.
Add up your average variable expenses and your current fixed monthly expenses to identify what you’re slated to spend the next few months. Now, compare it to your monthly income. If your expenses are more than your income, you have some choices to make.
Once you’ve determined the allotted amount you can spend on each area, you’ll need to track your spending as you go to make sure you stay within these boundaries.
Pay the Most Vital Bills First
This is where things get very practical. When behind on payments, you must first identify what your most immediate needs are. For most people, this is utilities. Look at your bills and see what the cutoff dates are for things like electric, gas, and water. These are the bills you’ll need to pay first, in order of date due.
Depending on your living situation, the next most important bills will be things like rent/mortgage, insurance, car payments, and so on. These are then followed by expenses like cable bills, subscription services, etc.
In many cases, you can work out payment plans for nearly all these expenses by calling the company. Many utility companies will even let you sign up for payment plans online, which will break up your past due bill into payments over the next several months to make it more manageable.
Always take advantage of these programs when you can. If you work out a payment agreement, be sure to adjust your current budget — you may be able to free up money to spend on other pressing bills.
Now that you’ve got your payments and income figured out, you’ll need to free up money to make it all work. The easiest way to do this is to reduce your variable expenses.
If you’ve been eating out a few times a month, try to forgo doing so until you’re caught up. Be more budget-minded when grocery shopping, abstain from going to the movies, or buying new clothes. By trimming your variable expenses, you’ll find yourself with a substantial chunk of cash after a few months that you wouldn’t have had otherwise. Everything adds up!
Look for Extra Income
Another way to get back to where you need to be with bill payments is to look for ways to boost your cash flow. There are plenty of ways to do this, such as taking extra shifts at work, working overtime, and looking for side work online using sites like Upwork and Fiverr. Even if you don't have graphic design or writing skills, you can find plenty of short-term gigs on these sites, such as paid surveys, product trials, or consumer information research.
If extra work is not an option for you, consider selling some unneeded items you have around your home on sites like eBay or Craigslist.
Get a Short-Term Loan
For some, getting a loan is the best way to catch back up on their finances. Acquiring a loan can enable you to pay most or all your late payments, opening you up to focus on paying that one loan off afterward, rather than juggling all the various debts you’re behind on.
By using a loan to catch up on late payments, you can receive instant peace of mind, simplify your finances, and avoid the hassle of either selling your stuff or adding even more work hours to your busy schedule.
At Cash Store, we offer multiple types of loans that can help you get caught up on bills or handle a certain one-time expense that may have disrupted your monthly budget. Our loan customers also have the option to later refinance their loans to reduce the payment amount.
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