Life happens. Despite your best efforts, you may find yourself falling behind on a payment or two.
For example, several clients have had this happen to them recently as a result of the pandemic. You lose your job, but your bills don’t go with it – you still must worry about those credit card bills and mortgage payments.
So, what do you do in these moments? Read on for a few tips.
Know it doesn’t make you a bad person.
Again, life happens. You could be the most focused and disciplined person financially and still find yourself in a bind. Things happen that are outside your control, and it’s not a ding on your character. I say this because our society sometimes teaches us to look down on people who are in this situation. Take a chill pill, Karen.
Take a deep breath and ignore the haters. Besides, you aren’t planning to stay in this situation because I know you’re a responsible person. I want you to:
Figure out a plan of attack.
If you find yourself unable to pay all your bills on time, you need to do triage. How much money will you have available to you? Good. The bills that aren’t that important? It sucks, but you’re going to have to let them fall behind for a while. If you don’t have the money to pay them, there’s nothing you can do. You may as well focus on the important bills and expenses you absolutely need for survival and worry about everything else next.
These are your “four walls”, a term coined by financial guru Dave Ramsey: Food, shelter, clothing, and transportation. Get these in order and then decide how to pay the rest of your bills. Once you have a plan together:
Proactively communicate with the companies you owe.
Let them know the situation: you’re facing a challenging time and you won’t be able to pay them this month. Then, communicate your plan to pay them back, too.
Don’t hide the fact that you’re facing challenges – be upfront and proactive about it. You want to let them know upfront that you are doing your best to work with them to resolve the problem. They deal with so many people who hide it, they might actually appreciate your honesty. Some companies even have forbearance programs for people in your situation. They know times are tough, too.
And sometimes, they can be unscrupulous. If they treat you poorly, shame on them. But also:
Don’t fall for threats.
If you’re behind, they may try to scare you into paying them above your priorities. Yes, I know my credit score will be impacted. No, you probably won’t sue me or send me to collections immediately. Yes, you need to be respectful, or I’ll rework my list, so you get paid last. Thanks for that, Karen; I’m now paying for my sofa before I pay you.
Don’t listen to them. What’s the point of paying a creditor when doing so causes you to fall behind with a more important bill? Would you rather make a credit card payment or pay your light bill? Would you rather pay a student loan or put gas in your car?
Point being, put yourself first. Food. Shelter. Clothing. Transportation.
Know this is a season, and you’ll get through it. This isn’t who you are. This is a situation that you have to work through. No one wants to fall behind in bills, but it happens. It can be uncomfortable, but you’ll get through it. You’re strong. Your credit score may be impacted temporarily, but you can rebuild it. If you don’t panic and approach it with a level head and a plan, you can ensure that you get out of the situation as quickly as possible.