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If you’re here to learn how to get caught up on bills, you’re in the right place. Showing interest in getting caught up is the first step. Often the response is to give up.
What I’m going to share with you today is a plan. A plan that will get you out of debt faster. A plan that will allow you to see the light at the end of the tunnel.
Seeing that light is a great feeling. No longer do you feel hopeless.
But keep in mind, a plan without action won’t get you out of debt. A plan with action, will change your future.
So do one thing today. You won’t regret it.
How To Get Caught Up On Bills
Step # 1 – Calculate Income & Expenses
You first step is to calculate the gap between your income and expenses.
Look at what you spent and made last month. You don’t need to go overboard with your budgeting categories.
Get an idea of what you spent in the major categories.
- Rent or Mortgage
- Debt Payments
- Everything Else
Your expenses are going to be greater then your income. It’s easy to want to make your situation look better then it is but you don’t have to show this to anyone. Get as close as possible to the actual gap between your income and expenses.
Step # 2 – Prepare a Net Worth Statement
Next step is to prepare a statement of your assets and liabilities.
Similar to the budget you prepared above, it’s easy to flub the numbers here. Be as accurate as possible, it’s only going to help.
Make sure to add overdue bills to your liabilities (which would be under installment debts).
Step # 3 – Make A List Of All Your Debt
List your debts along with the balance, payment, and minimal amount due. Include any overdue bills as debt.
Resource: Debt Reduction Spreadsheet
Step # 4 – EMERGENCY Frugality
If you can’t pay your bills, what you’re in is an EMERGENCY. You can’t keep going down this same path. Something needs to change.
Paying $100 a month to stream TV into your home isn’t an option. Neither is paying $4 for a coffee or $7 for a burrito bowl. (If you want those things, realize that you’re cheating yourself out of them by paying interest payments).
If you HAD to start spending less then you made, what would you do?
You’d probably do something along the lines of:
- Cut transportation expenses by walking or riding your bike everywhere and maybe even selling a car
- Not pay for a gym membership
- Be eating rice, bean, and ramen noodles each night (Tip: Sign up for $5 Meal Plan to slash your grocery budget).
- Stop paying for cable and learn to use the library
- Stop buying clothing, unless it’s absolutely necessary for a job interview
- Negotiate anything you can
- Lower your cell phone bill
So, write down a list of what you would do if you HAD to lower your expenses. If you’re having trouble, here’s a list of 100 ways to cut expenses.
One helpful tip, which I do myself, is to use Trim. Trim makes it easy to organize and cancel any of your subscriptions. Gets you money back on past purchases. And will even negotiate bills on your behalf.
You can signup for free.
The more aggressive you are with cutting expenses, the greater the benefits.
Step # 5 – Prioritize
House, utilities, the cheapest transportation possible for work and food. Those are your top priorities. Those bills must be paid.
Just because a bill collector is calling, doesn’t mean you should prioritize that bill. Put yourself and your family first here.
Step # 6 – Make An Income Plan
You need to attack your situation both from an income and expense standpoint.
Your next job is to make a plan for increasing your income.
Use urgency here. Ask yourself if you had to make an extra $500 this month, what would you do?
Depending on your situation, your options here are to:
- Sell anything you can do without on Craigslist
- Pick up extra hours at work
- Look for a job that pays more
- Get a second job
- Do odd jobs for family and friends
Online surveys are another way to make money fast. There are dozens of legitimate companies that pay you for completing surveys.
Here are five legitimate survey companies you can start with:
- SwagBucks – In total, Swagbucks has paid out over $187 million in rewards. You get a $5 bonus just for signing up.
- SurveyClub– Survey Club has one of the best user interfaces for finding high-paying surveys, as you can sort by estimated time to complete and payout.
- MyPoints – Founded in 1996, they’ve paid out over $236 million in cash and rewards.
- YouGovYouGov – One of the world’s largest research companies with over 5 million members worldwide.
- Global Test Market – Global Test Market paid out over $32 million in rewards in 2014.
Resource: 12 Legit Survey Companies That Pay Cash
Step # 7 – Communicate
While the initial reaction is to hide from your creditors, that’s not a long-term option. Eventually, you must make them go away.
Your best chance of doing that is being proactive and communicating with them. Don’t wait until they call you. The more aggressive service people are typically the ones making outbound calls.
Call each of your creditors and ask about your options. Tell them about your situation.
You’d be surprised that a lot of positive things may happen when you reach out. Don’t be afraid to ask if they can cut the interest rate or even eliminate late fees. Some may even put your balance on hold on your account.
After you call all your creditors, update your debt reduction spreadsheet.
Step # 8 – Pay Off Those Debts
Now it’s time to put everything together.
- Your first priority is to pay your necessary expenses (Meanwhile, you’re doing everything you can to make more money).
- Your next priority is to get current on all your bills by making the minimum payments
- Once you’re current on all bills. Organize them by highest interest or lowest balance first. Any money that’s leftover, you want going toward your highest priority debt.
This process might take a few months or even a year but don’t stop. Eventually if you continue to cut expenses, increase your income, and prioritize your debts, one day you’ll not only be caught up on your bills and out of debt, you’ll be quickly accumulating wealth.