How to Catch Up When You Are Behind on Bills

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Are you behind on bills and struggling to catch up?

Does it seem like you are underwater and it’s getting harder and harder to get out of debt?

Ready to create a budget, a plan, a system to help you get back on track?

There’s no worst feeling than when you find yourself in a deep hole of debt and can’t pay your bills. When the debt starts to become unmanageable, you start to feel like you’ll never get out.

If you have found yourself in this situation, know that you are not alone. In a survey by Lending Tree, over 50% of Americans could not afford a $1,000 emergency and had to borrow, sell, or raise funds to help. There’s a high price for borrowing money and it’s the reason many people struggle to stay afloat.

Let me tell you, mama, you will become debt free. You will succeed and you will reach the financial freedom you deserve. But first, let’s get you caught up on bills and budgeting well.

I’m going to provide you with a step-by-step guide to learning how to budget when you are behind on bills. It’s not going to be easy. Truth be told, it’s going to be difficult for a bit but these are the necessary steps to improve your current financial situation.

Before we get into the nitty-gritty, I’d like to invite you to a very special group for moms who are in the same circumstance you are in. Here, you will find like-minded women who want to improve their finances whether it is to get out of debt, to save money, or to learn to budget.

Step 1: You Must Change Your Money Mindset

There’s always one thing that forces me to change or accomplish a goal. That is: Being fed up. Fed up with debt, fed up with breastfeeding, fed up with a dirty house, fed up with going to work all the time. What is it about your situation that gets your blood boiling? Take that and use it.

Here’s why.

You need to examine your relationship with money. At one point in your life, you may have experienced something that altered your perception of money. At first, it was a tool. Now, it’s a burden. Consequently, you subconsciously keep this in the back of your mind as you encounter new challenges with money.

Suddenly, you find yourself focusing on never having enough and never catching up. That negative focus leaves you with less than desirable results.

It’s time to change your money mindset.

Stop telling yourself, “I’ll never get out of debt” or “I’ll never be able to live like that” because you won’t.

Instead, create a vision for yourself. You are the creator of your own success. Maybe you’ve made a poor decision in the past, but you cannot change the past. Maybe a divorce left you in heaps of debt, but you cannot change the choices of others.

What you CAN do is make adjustments to your life and circumstances now. Get angry at your debt, get pumped about your future debt-free lifestyle, and start to visualize your achievements.

Are you ready?

You may also like: The Top Frugal Habits of Debt-Free Families

Step 2: Determine How Far Behind You Really Are

In order to make a plan, you need to understand just how far behind on bills you really are. How will you know where you are going if you don’t know where you are?

Assessing the situation is a crucial step. I know it’s easy to avoid the situation especially when it becomes so overwhelming but do me a favor and push past that fear. Let your fear guide you, motivate you, and allow you to execute instead of letting it paralyze you.

If you continue to hide from your situation or mask it, it’s only making matters worse even if you can’t see it. Your credit card balance will get bigger and bigger because of interest and late fees. Your student loan will continue to grow for the same reason. You’ll take a big hit to your credit score and it the worse cases, your car will be repossessed or you can be forced into eviction or foreclosure.

Face your circumstance dead on and get fired up knowing that you will succeed.

Here’s how to determine how far behind on bills you really are…

You may also like: How Millennial Moms Can Start Paying Off Debt

Step 3: Write It All Down and Organize

Once you have assessed your situation, I want you to write everything down on a piece of paper. I mean everything. It’s important to see everywhere your money is going in addition to everywhere it needs to go. When you are behind on bills, it’s going to even more important to tell your money where to go.

Fixed Expenses

First, start by writing down your fixed expenses. Fixed expenses are the bills that you pay every month on a regular basis. They usually don’t change in cost and their due date is usually the same. Some examples of fixed expenses are:

• Mortgage/Rent
• Water bill
• Electric bill
• Gas bill
• Sewer bill
• Insurance
• Cable

Make sure to include everything you can think of. Don’t forget to include you quarterly bills such as HOA or your yearly bills such as your vehicle registration and tags. Do try your best not to leave anything out.

Variable/Discretionary Expenses

Next, write down your variable or discretionary expenses. These are expenses that don’t necessarily have a specific due date nor are they the same every month. Some of these include:

• Groceries
• Fuel
• Clothing

Again, try your best to think of everything you might spend your money on every week, month, quarter, and year.

Debts

Now, write down all of your debts. Who do you owe money to?

Even if you aren’t actively paying your debts, write them down here so that you can get organized. If you are having trouble finding out who you owe money to, you can always pull your credit report.

Your credit report will show you how much debt you have and the lender who has lent you the money. Some debts include:

• Vehicle loan(s)
• Student loans(s)
• Credit card(s)
• Medical bills
• Personal loan(s)
• Family and/or friends

Outstanding Balances

Next, write down all of the companies in which you have an outstanding balance or late payments. This step is crucial to finding out just how far behind you are.

Next, jot down the contact number to call. Yes, you will be making phone calls. I know it’s tedious and I don’t like talking to people on the phone either but in this case, it’s absolutely needed.

Then, write down the balance that is outstanding over overdue. You can find this number by checking your online account or by calling the company to find out.

Now, write down what your monthly payment normally is. Even if you don’t pay it, you’ll want to start (if you can). Again, if you don’t know this number, go online or call the company.

Once you have these things, you have a pretty good idea about how far you are behind.

You may also like: How to Create a Zero-Based Budget that Works

Step 4: Discover Your Underlying Problem

So far you are ready to make a change, you have assessed your situation and know exactly how far behind you are. Now, I want you to focus on the things you can improve.

For this step, I want you to analyze your current spending habits. Tracking your spending not only keeps you honest but it shines the light on your problem areas.

Do you eat out too much? Are you an Amazon fanatic? Do you chase “deals” all the time to the point where they aren’t really deals? Do you spend too much on utilities?

By tracking your spending, you are going to find these things out.

In order to track your spending, you can either start from scratch with a pen and paper or you can request bank statements from your bank(s) and/or credit card(s).

I designed a free Monthly Expense Tracker that you can use if you’d like. I use this myself and it keeps me on track. Sign up to get your expense tracker here.

Ideally, you should have 3 months of data to look back on. If you don’t, that’s okay. Just focus on one month for now.

Look at the data and find out where your money is going. This is going to shine the light on your problem areas.

You may also like: Learn How to Effectively Track your Spending

Step 5: Make A Plan

Now it’s time to make a plan. Let’s review.

You are ready for change, you have assessed your situation and know just how far behind you are, you have organized your expenses and now you are ready to make a plan to tackle it.

Prioritize your game plan

You’ll need to decide who to call first. You don’t want to make a plan with everyone all at once if you can’t afford to pay everyone.

First, make a plan to pay off your necessities. This would include the things necessary to survive. Water, electricity, gas, ect.

Next, focus on the items that have collateral. Your mortgage, rent, vehicles. If you don’t pay your mortgage, you’ll risk foreclosure. When you don’t pay your rent, you’ll risk eviction. Skip a few car payments and you’ll risk repossession.

Then, you can focus on the rest like student loans, credit cards, personal loans, ect.

Ultimately, you are the one making this decision. If you’ve got an extra car that you really don’t need and it’s behind on payments, is it really a priority? Are you willing to let it go? If you’ve got an outstanding loan threatening you or pestering you, maybe you’ll want to deal with that first.

Everyone’s situation is different so make your priority list based on your own circumstance.

Call each company to negotiate

Remember the overdue balance worksheet that I had you make? The one with the list of everyone you owe with their contact number? Grab it.

Go down the list and start calling each company according to your prioritization. Tell them your situation, be honest and kind.

You can say something like, “I’m really behind on bills and I’m trying to make an effort to get caught up so that I can provide for my family. Would you be able to help me figure out a solution?”

Negotiating with companies can be intimidating but most people are willing to help. Any business person knows that it’s easier to keep a customer than to gain a new one.

You may have to call a few times to talk with the right person. Some might say no, call again to speak with another person. This is going to take some time. But be patient and give yourself grace.

Companies might offer a “catch up” plan, meaning you will be able to pay the overdue balance over a period of 3,6, or 12 months. Some may offer an extension which can give you time to pay off other balances.

When you speak to the representative, write everything down. Who you spoke to, the date you called, and the agreement you settled on.

If you settled on a “catch up” payment, write this down. You will be adding it to your original payment because you still need to pay the original monthly bill. This will become your new total.

In the picture below, the overdue balance for the electric company was $249. The normal monthly payment is $125. The catch up payment is $41.50 which is $249 divided by 6 months. So the new total payment will be $166.50.

Step 6: Create Your New Budget When You Are Behind on Bills

Now it’s time to create your budget. How exciting!

Start by adding up your income.

Next, subtract all of your fixed expenses from step 3. Keep in mind that you need to write down your “new total” so that you can keep your end of the deal.

Then, subtract all of your variable expenses. Remember to keep this minimal. At this point, focus on pure necessity.

Now, subtract your minimum debt payments (unless you’ve negotiated a “new total”).

Don’t worry about savings or extra debt payments right now. Your main focus is to get caught up. Eventually, you’ll be able to slowly add these back into the budget but for now, keep them out.

If you’ve come up with a negative number, you have two options. Decrease your expenses or make more money.

You may also like: The Budget by Paycheck Method will Finally Help You Gain Control of your Finances

Step 7: Decrease Your Expenses and Spending

The first step in finding more money in your budget is to analyze what you are already spending. Remember when I told you track all of your expenses?

Take a look at all the areas where you can decrease your spending. This is where you need to be completely realistic and hard on yourself. You may have to make some tough decisions like selling your car, moving, or stop buying brand name clothes and expensive beauty products.

If you don’t have unnecessary expenses, the next thing to do is to try to decrease your utility bills. You can do this by negotiating for a discount, asking for a lower rate or decreasing your utilization of services.

For example, if you don’t use all 5GB of cellular data, consider lowering it to a 3BG plan to save some money and find a few dollars. Or switching your carrier entirely to a pay as you go plan. My favorite carrier to use when I was really trying to save money is Republic wireless. My phone plan was $14 per month. I was just what I needed at the time.

Here are some other ideas to lower your expenses:

• Switch services
• Cancel services
• Negotiate a discount
• Look for employer discounts
• Decrease services
• Move (although this is unrealistic for most people, but is an option for people who are up for a drastic change)
• Downsize your home or car

You can also use an app like Trim to do all the negotiating for you. I haven’t personally tried this but many have and have saved lots of money.

If you have a bare bones budget and have cut in all the places that you can think of then you are going to need to increase your income.

You may also like: 15 Ways You Are Wasting Your Money

Step 8: Make More Money

There are plenty of ways to make more money. It doesn’t always equate to getting another job though. Getting another job can be a little unrealistic for some women, especially those with multiple children, live away from family and friends, single moms, or those with medical disabilities.

Thankfully, the wonderful world of the internet can provide you with plenty of opportunities to make money without ever leaving your home.

Here are some other ways that you can make some extra money:

• Drive an Uber or Lyft
• Mystery Shop
• Become a freelance writer
• Open an online boutique
• Become a virtual assistant
• Sell your unused items
• Have a garage sale
• Work for VIPKID teaching English to kids in other countries
• Turn your hobby into a money
• Walk dogs
• Babysit neighbor’s kids
• Rent out a spare bedroom
• Complete surveys

For more ideas on how moms can make money fast, read this article that is loaded with ideas.

Seek Help

If you have sacrificed and cut your budget as much as you can, cannot seem to find ways to make money, there are options.

Government programs can help those who are struggling. Consider going to a food bank for groceries, applying for temporary assistance, welfare, and Medicaid to name a few. Your church can also provide support for you and your family, please don’t underestimate the power of the Church.

I understand that having to ask for assistance can be embarrassing but if your situation is far beyond your control, you need to ask for help. Please don’t be afraid to ask for help.

Be Flexible

Once you create a budget, it’s not going to be the same every month. When you get caught up or manage to pay off a debt, your priorities will start to change. You’ll need to be able to adjust and rework your budget to reflect the changes.

The process will remain the same, but your numbers will change.

There are also times when something comes up. Something always comes up right? You need to be flexible and keep your eye on the target. Re-work your budget and continue the process, prioritizing as you go.

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