Regardless of external economic influences, such as inflation or unemployment rates, your finances will likely experience ups and downs. If you find yourself concerned about being able to make all your bill payments, don’t panic. There are options for you and steps you can take to get through a rough patch.
1. Immediately contact your lenders, creditors, and any other loan servicers.
Proactive communication with your lenders and creditors is critical. As soon as you’re concerned about meeting payment requirements, get in touch with them. The likelihood is that they have some kind of process or procedure in place to work with people who find themselves unable to make payments. Options may include:
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Forbearance
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Deferment
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Loan extensions
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A reduction in interest rates
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Other flexibility for repayment
When reaching out, be prepared to discuss your income/employment situation, your current financial position, how much you can afford to pay, and when you are likely to be able to make payments again. Lenders and creditors will not wipe your debt clean, but that information will help them find the best possible solution for both of you.
2. Contact utilities to explore financial assistance programs.
No utility wants to shut off services to struggling customers. Almost all water, electricity, and heating companies have some type of assistance program to help those in need. It takes some time to process program applications, so be sure to reach out before you’re in a situation where you can’t pay your utility bill.
3. Use this time to take control of your finances.
When money is tight, it can be an incredibly stressful time. The goal should be to avoid finding yourself in a similar situation in the future. While earning or saving more money might be a long-term goal, one thing you can do right away is to improve your financial savvy.
PSECU offers a host of financial education resources and tools. Arming yourself with as much knowledge as possible about money and money management will empower you to take control of your finances.
In addition to improving your financial prowess, you can do simple things, like:
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Write out a list of your monthly income and expenses and set a strict budget.
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Prioritize your bills so you’re focusing on paying for the most critical things first (like housing, food, transportation).
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Assess any expenses you have that are not necessary, such as subscription services or frequent dining out.
4. Explore the possibility of earning more money.
It’s likely that one part of why you find yourself behind on bills is because your expenses outweigh your income. Budgeting effectively and focusing on spending only on essentials can help, but so could earning more money.
If it’s possible for you to take on a “side hustle” or to work two jobs, the extra income could have a significant impact on not only catching up with any payments you may be behind on but could also even allow you to get ahead. While this option isn’t viable for everyone, it is something to consider.
5. Make a plan to save more.
While saving might be the last thing on your mind when you’re just trying to pay your bills, it should still be a goal. Saving between 10% and 20% of your monthly income is generally recommended. These percentages would be for both emergency fund and retirement savings. Your emergency fund should be sufficient to cover about six months of living expenses. Having money put aside will enable you to navigate tough times more easily and can provide a sense of security.
The number one rule of building your savings: get started. Even one dollar makes a difference over time. Think about ways you can automate your savings. Set a recurring transfer to coincide with your payday, so you never even see the money. Or you could drop your change into a jar at the end of every day. Cashing that in after a month or a year can add a nice boost to your savings. Did Grandma send you $20 in your birthday card? Set it aside in your savings account.
You can also look at savings in the sense of reducing expenses. Could you find a place to live that’s less expensive? How about clipping some virtual coupons in your grocery store’s app? What about visiting the local coffee shop less? Be sure to sign up for free store rewards programs, too. All of these things will help reduce your expenses and allow you to channel some extra money into savings. Check out our post on five money-saving life hacks.
Here for All of Life’s Ups and Downs
When money is tight, it can be an incredibly stressful time. These tips, along with some hard work, will have you out of the red in no time. PSECU is here for all of life’s twists and turns with a full range of banking products and services that aim to help our members achieve more. Whether it’s a free checking account or ways to help you consolidate your debt, we’ve got your back in any circumstance.
