Here's What to Do If You Can't Pay Your Bills On Time

Not having enough money to pay the bills is an issue we may face from time to time. Life is full of financial ups-and-downs, and after all, we're all human.

Don't beat yourself about the situation or get discouraged. Vow to take action. If you don't make changes, things will stay the same. If you're in a tough financial spot, here's what to do when you can't pay your bills on time, and tips on how to best handle the situation.

1. Don't Hide From the Facts

Do you know why you can't pay your bills? Did you overspend, have to make up for an emergency, or was it just human error? Don't hide from the facts, but instead embrace them head-on. Not dealing with this financial mess can lead to more late fees, higher interest rates, additional interest charges, and even damage your credit report.

Avoiding paying your bills will only make things worse, so make a choice to rectify things right now. You may realize that the situation is not as bleak as you thought, and that there are more options available than you believed.

2. Change Your Financial Momentum

Now that you're ready to face the facts, start by listing all of your current bills and debts. Pull up your bank account (or bookkeeping software) and review all of your transactions, deposits, and other expenses.

Then ask yourself why you're in this financial bind. There are usually two causes of a financial emergency:

  • Spending too much
  • Not making enough

If overspending is the cause, then look for ways to scale back your spending and stop the bleeding until you get back on top. Think outside-the-box and look for creative ways to afford the things you need.

If you've cut back your spending as much as you can, look for ways to bring in more money using the skills you already possess. What can you do this week to bring in some extra cash? Go through your house and prep items to sell at a yardsale or on Craigslist. Ask friends and family if they need help with a weekend project. Turn your hobby into a paying gig on the side by using sites like eBay or Etsy.

Figure out the cause of why you can't pay all of your bills, and take action to change your momentum. It may take a few months for your budget to adjust to the changes, but be patient and know that it will be worth the sacrifice to avoid this situation in the future.

3. Prioritize Your Bills Based on Importance

If you've completed steps one and two and still find that you don't have enough money to pay your bills, it's time to prioritize which ones get paid based on their level of importance. Obviously you need to pay your utility bills, like water, heat, and electric, as well as paying your landlord and putting food on the table.

Mark any secured debts connected to assets like a mortgage or car as next in the line of importance. If you default on those bills, it's likely you will lose the roof over your head, or your ability to drive to work to earn a living.

Any other funds leftover after paying these important bills can be put towards other debts and balances owed.

4. Figure Out Your Options

Can you get approved for SNAP (food stamps assistance) until you get back on your feet? Does your electric company offer help from the community for bill payment? Call your financial institutions' customer service departments and figure out your options. Many local banks will give you an extension on your payment if you simply call and plead your case.

Most creditors would rather help you pay your bill than lose you as a customer, so don't be afraid to call and and explain the steps you're taking to get your finances back on track. In other words, be proactive with your bill payments. Institutions will be more willing to help you out if you take the initiative to fix the problem.

Once you've come to a payment agreement with the institution, be sure to get the details in writing and keep them in a safe place for future reference. You may be able to ask for a refund of any fees or interest charges, and you'll want to keep written proof of this.

5. Create a Long-Term Plan

It's easy to get into the endless cycle of being broke, which is why it's important to change your financial momentum before it gets out of hand. As you begin getting back on top of your finances, take steps to develop a long-term strategy that will ensure you aren't in this position again.

Combat emergency situations by saving up a small emergency fund. Simply start with $5 or $10 a week until you have a solid savings habit established. Streamline your lifestyle and learn to live without a lot of stuff by focusing on creating memories instead of accumulating clutter. Downsize your home, sell your car and use public transit, take on an extra job for the summer — do whatever it takes.

Sometimes you simply get behind on your bills because you forget to pay them on time. Avoid this in the future by setting up bill payment reminders or signing up for automatic bill pay.

6. Know That This Will Get Better

You likely feel discouraged about your current financial situation, but know that by taking these steps, it will get better. We've all faced tough times when it comes to money or our careers.

Channel your frustration into forward momentum so you can regain control of your finances and are again able to pay your bills in a timely manner.

What's another tip that will help you pay your bills on time?

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