Are you behind on bills? There are many reasons you could be struggling to pay on time. Maybe it’s due to a reduction in your income. Perhaps you’ve had some unexpected emergency costs arise. Or maybe you are drowning in debt. Don’t despair. I'm going to go over how you can create a plan on how to catch up on bills and get back on track.
The main thing to remember is you are not alone when it comes to having difficulty paying bills on time and being in debt. According to the Federal Reserve Bank of New York, the total household debt reached over $15 trillion in 2021.
Although mortgage balances make up the bulk of that amount, auto loans made up $1.4 trillion, $800 billion was in credit card balances, and $1.5 trillion was debt from student loan balances. One hundred ninety-one million Americans have at least one credit card, and the average balance for credit card debt is $5,315 per household.
That being said, it's still completely possible to get caught up on your bills and get ahead so you can pay on time!
6 Steps to take if you are behind on bills
We understand the stress of having bills to pay and mouths to feed. Take a deep breath and take these key steps so you can catch up on bills and work towards paying bills on time!
Step 1: Get organized to pay on time
One of the first steps to catch up on bills is to know the full picture of your income and expenses. And that means it’s time to get organized. Whether you create an excel spreadsheet or you’re more of a pen and paper type, you want to layout every bill.
Once you determine what bills you have, organize them as follow so you can pay on time:
- Due Date
- Past Due Amount
- Minimum payment due
- Total balance Due
Don’t forget to check your credit card and checking accounts for automatic debits and withdrawals. I strongly suggest getting your free credit report to look for any other accounts that may have been forgotten. Getting organized is essential if you are behind on bills because it helps you keep track of what is due so you can pay on time!
Need help getting organized with bills? Check out the Clever Girl Finance Debt Prioritization worksheet.
Step 2: Evaluate your finances
Once you’ve listed all of your bills, it’s time to evaluate those bills and also your expenses. Determine which expenses are essential versus non-essential. Be honest about what is a need versus a want.
Now is the time to limit your discretionary expenses. What recurring expenses can you reduce or cut entirely? For instance, you can review your spending on:
Take a moment to understand the information in front of you. Maybe you are behind on bills because you have too many bills to pay! Did you know you were still paying for a magazine subscription? Is there a free version of your favorite phone app that you can use as an alternative? When was the last time you used your gym membership?
Recurring monthly expenses can add up quickly. Cutting all non-essential subscriptions and monthly expenses is a great way to reduce your costs if you are behind on bills.
When looking at your list of bills, notice which expenses are variable each month. Find ways to reduce variable expenses like groceries, electricity, and fuel costs.
Bonus Tip: Try a 30-day money challenge to reduce your expenses.
Step 3: Call your creditors
If paying bills on time is becoming a constant struggle, then it’s time to call your creditors. First, start off by calling every company and canceling any service you no longer need or want. Many companies allow you to cancel your subscriptions online with no need to call.
Secondly, work on negotiating your bills. Haggling over prices may seem taboo, but many expenses can be negotiated down. Experts say that up to 80% of medical bills contain errors. Check your statements carefully. Don’t throw away money. If you don’t understand a charge, call and get answers.
When negotiating a bill or asking for a better price, speaking to a live customer service representative is key. Consider bundling services together like your internet and cable service or home and vehicle insurance.
Lastly, ask for a payment plan. If you are behind on bills, ask to be placed on a payment plan. This will minimize the risk of your account going into collections and damaging your credit score.
Another consideration for mortgages and vehicle loans is refinancing the loan for a lower interest rate. In order to make the most of the option, try to keep the loan length the same. If you have 30 months left on a car note at a 4% rate, consider refinancing for 30 months at 2.2%. Use a site like Bankrate to shop for and compare interest rates.
You normally won’t get penalized for asking for a lower interest rate or a better price on an expense like a cellphone plan. The worst that can happen is they say no. I’ve had success in getting better pricing for my vehicle insurance, cable bill, and magazine subscription. When in doubt, ask for a discount.
Step 4: Comparison shop
Don’t overlook the opportunity to switch companies for a better price. Check out alternative cell phone carriers like Boost Mobile or Mint Mobile to slash your cellphone bills. My husband switched to Mint Mobile last summer and loves it. Companies like Mint are mobile virtual network operators (MVNO).
Basically, they use the same cell phone towers as the major cell phone carriers. MVNOs enter into an agreement with a mobile network operator to obtain access to network services. Mint mobile uses the same towers as T-Mobile.
Recently, I discovered that using a program like GoodRx allowed me to pay less for prescriptions. GoodRx is a comparison website that collects prices and discounts from thousands of pharmacies. There is no cost, just download the app or visit the website to find coupons, yes coupons, for prescriptions.
Step 5: Earn extra income
Housing, food, utilities, and transportation expenses tend to make up the bulk of our bills to pay. Reducing costs in those areas is crucial. However, cutting expenses isn’t always enough.
When you have cut expenses but still can’t catch up on bills, consider ways to make additional income. Here are some ways you can boost your income quickly:
Ask for a raise
Be sure to highlight your accomplishments, the length of time you have worked with the company, and also the last time you actually had a raise. This will help increase your chances of being paid what you are worth!
If a raise isn't in the cards, it may be time to look for a better-paying job. So polish your resume and find a job that you love that pays you more too! Remember to negotiate your starting salary, so you don't cut yourself short.
You may be able to make more than you think. Compare salaries based on your skills to figure out what you should be paid!
Sell your stuff
Why not turn your stuff into cash? You can declutter your home and make money while doing it. So it's a win-win! You can sell your items online or locally on platforms such as Facebook Marketplace and Letgo.
Start a side hustle
Starting a side hustle can be a great way to boost your income. There are many lucrative side hustles to start such as freelance writing, virtual assisting, pet sitting, and more. Plus, having multiple streams of income will help you save more money, so you won't be behind on bills anymore!
Try a money hack
You can even do something as simple as switching banks to earn cash bonuses. Remember, every dollar counts and can help you to catch up on bills.
Split bills with your partner or roommate
Sometimes they may not realize you are behind on bills if you don't communicate. So openly talk about it and see if you can get a little help to catch up.
You can also find a roommate so you have someone to split the bills and rent with. This can reduce your expenses quite a bit, so perhaps it's time to consider it.
Step 6: Execute your plan to catch up on bills
You have made a list of all of your bills to pay, lowered expenses where you could, and have negotiated better prices, and scored some money-saving deals.
You even found a few ways to make some extra cash. Now it’s time to execute your plan to get caught up on your bills.
Create a spending plan or a budget. The best budgeting tool is the one you will use. Some prefer budgeting apps, but I like a good spreadsheet. Test out different tools and see what works for you. Make a list of all of your expenses and include the amounts negotiated for your new debt repayment plan.
I am a huge fan of “setting and forgetting it.” I’ve been guilty of incurring a late fee for simply forgetting to submit payment. If you are like me and have missed a payment due date, then automate your payments.
Interest and late fees can be avoided by automating payments to be deducted automatically from your checking account. Most banks even have an option that will send mortgage payments to your mortgage company or property management offices to pay rent for no fee.
Whether you use automatic payments to pay the monthly bill in full or just the minimums, setting up a recurring payment will reduce the number of late payment fees you incur. If you pay on time, it can save you a ton of money in late fees!
You can catch up if you are behind on bills!
Getting behind on bills can feel overwhelming and frustrating. It’s okay to feel scared and disappointed, but don’t let panic paralyze you. Instead, use these steps to take charge of your past due bills and take control of your finances.
Remember paying bills on time is important because it not only saves you money but also prevents you from damaging your credit.
So, take control of your money and create a budget that works for you with our completely free budgeting course! Also, subscribe to the Clever Girls Know podcast and YouTube channel for more top tips on saving money, budgeting, and building wealth!