“I can’t pay my bills!”
How many of you have said this recently? Have you heard friend or family member say this?
This is post is written for those who are struggling mightily with their finances during challenging economic times. These practical tips and tools can help you walk out of this situation and into financial freedom.
– Prepare A Written Spending Plan
There is so much power in a written spending plan! I never realized where all of my money was going until the day that I began planning my spending.
You might say, “But Joe, I know that I can’t pay my bills. My expenses are more than my income so why should I even bother with preparing a spending plan?”
I would respond with this answer. “It is hard to slay a dragon if you do not know how many heads it has!” A spending plan will ensure that you know the ACTUAL situation instead of the IMAGINED situation.
Prepare your plan – even if you know it is going to be awful. This is the start of your journey to financial freedom!
Access our budgeting resources to get started on your plan!
– Ask Questions
It is extremely important to ask questions that help define the true root cause of the issue.
When I am counseling someone experiencing this sort of situation, I have a series of questions I ask to help me grasp the issues. Here are some of the questions for which I am seeking answers. These are not in any particular order.
“What Was The Cause Of This Situation?”
Ultimately, I am trying to determine if the current situation is the result of a long series of financial decisions or the result of a catastrophic event (job loss, medical issue without insurance, death of income provider, etc.).
“Is This An INCOME Or An OUTGO Issue?”
I want to see where the money is going. That is why Part 1 is so important. The spending plan will help you more clearly determine the answer to this question. From experience, I have seen that it is an OUTGO issue in most cases.
“What Are The Required Debt Payments?”
Is this unsecured revolving debt (credit cards) or is this installment debt on an asset (car, boat, motorcycle, etc.)? This question will be key for Step 3 of this post.
“Is There Something That Can Be Sold?”
If there are items that can be sold, this needs to be fully investigated to understand how it can help the situation. Selling something like a motorcycle can help bridge your “gap” to help you prevent racking up debt.
“What Expenses Can Be Stopped?”
Are there any “extras” in the OUTGO? One example of this is nonessential subscription services like Netflix or Hulu.
“How Can INCOME Be Increased?”
An extra job or tons of overtime may not be appealing, but living in a squalor of debt with no hope is even worse! It is very important to investigate short-term ways to increase income to get out of the current late bill payment situation.
“I Can’t Pay My Bills” But I CAN Do Something!
Not being able to pay your bills can feel crippling, but I want you to know that you CAN help your situation.
We want to be able to help you along the way. Visit our Next Steps and Tools pages on our website for free resources to equip you on your journey.
By identifying your gap and taking action it will allow you to maximize the dollars you do have and minimize how much you spend. These actions will enable you to prosper on the other side of this. You can do this!