If you have been struggling to pay bills recently, you are not alone. According to the Washington Post, “Millions of Americans who lost their jobs during the pandemic have fallen thousands of dollars behind on rent and utility bills, a warning sign that people are running out of money for basic needs.”
With the pandemic raging on and federal programs for mortgages, rent, and student debt ending soon, it may be increasingly difficult for you to pay your monthly bills with your current job. If you find yourself sitting down with your bills and wondering which ones you should pay first, consider your needs before your wants.
First off, pay the bills that take care of your basic needs. Rent or mortgage, basic frugal groceries, utilities. If you don’t want to be hungry and homeless, these are the most important bills to pay.
If you have debts that you are paying down, look at the consequences of not paying them for a time, or paying less on each of them. Many student loan or mortgage providers may work with you to draw up a repayment plan that suits your current financial situation. However, be careful as you negotiate. Make sure the lender does not increase your interest rate, add extra penalties, or charge you fees for providing the service.
Contact a consumer rights attorney if you are in a loan that you know has taken advantage of your rights. Recently, the Consumer Protection Bureau cracked down on lenders with fraudulent or predatory lending schemes. Just this week, Discover Bank was ordered to pay at least $10 million in consumer redress and a $25 million civil money penalty because of their private student loan lending practices.
If you are paying down multiple credit card debts, consider not paying one or more for a time while you pay off the ones with the highest interest rates. As you have fewer debts to pay off, you may feel a sense of accomplishment that gives you the momentum to start paying down your next debt. However, always contact your debtors to work out repayment plans if possible before going to these drastic extremes. Don’t just stop paying without trying to work something out.
If your debts are medical in nature, there are often more flexible programs available for repayment. Definitely call and work with medical providers before your bill is sent to a collection agency. Collection agencies are often less willing to help you make a plan. Medical facilities will often be understanding and work with you to set up a repayment plan you can live with.
Will I Go to Jail?
You don’t go to jail for not paying your debts, but with some types of loans, you may face penalties from the courts eventually if a debt collection agency sues you for non payment. If you don’t pay student loans, you could face wage garnishment eventually.
However, as you decide which bills you can pay this month, there is only so much you can do. Choose to pay your necessities first and consider what you can do to make enough to pay all of your bills next month.
If you are renting, consider what the costs would be to break your lease and move somewhere that you can afford to pay every month. This is easier said that done however, because of the fact that your rental history affects where you can rent in the future.
If you are already in the cheapest place you can afford, consider adding roommates. There are many people out there in the same financial boat who could pay a small amount to share a room each month. If you can find someone to share with until your financial situations both improve, you can eventually catch up on rental back payments and save your credit score from going down.
According to NPR, local governmental agencies have various funds set aside to help those who qualify for rental assistance. Go online and look for these types of programs. Some may find you a new rental that includes governmental assistance while others may help you pay for your rent where you are now.
When You Own Your Home
It is important to consider all of your options when you reach the end of your budget. If you have a house with extra space and can afford to rent out a room, you may save enough money to find a way to pay all of your bills rather quickly.
You can also talk with a realtor about selling if you have equity in your home. Another option if you have good credit, is a home equity loan or line of credit. You can generally take out these types of loans at a lower interest rate than any debts you are currently paying every month.
Other Bills of Necessity
If you have a car, consider selling it and not paying car insurance, taxes, and a payment every month. Many people get around using ubers or city buses. However, if your car is the only way to get around where you live, these bills must be a priority unless you can strike up a deal to share a car or share rides to work, etc.
Without power or gas, your home could develop mildew problems in the summer and be unlivable in the winter. Check out programs in your community that may help you pay these necessary bills for a time. Many cities have programs that help those who are struggling financially until you can find your way back to stability. If no programs are available, these bills are necessary to your survival.
Water & Trash Services
Obviously this is an important bill to pay if you are on city water. It may be possible to go without trash service though if you have a car and a dump close by.
Internet and Phone
There are many ways to get these services cheaper. Not paying for a month or two is one thing, but if you don’t pay for several months, your service will cancel. Better to be proactive and choose to research all of the alternatives. Maybe you can use the internet at the library some or get a cell phone on a limited service plan.
Work on Your Budget
If you sit down and really think about what you spend, you may realize that there are amenities you pay for that you don’t need. Scour your credit card transactions for recurring payments to services such as photo storage, games, or entertainment services such as Netflix or Amazon. All of these charges can add up. Consider whether you can get cheaper car insurance or buy canned meat instead of steak for a time.
All of the small purchases add up over a year’s time. A bit of planning on your part can go a long way toward peace of mind with your monthly bills.
If you are facing harassment from one or more lenders or debt collectors, contact an attorney who works on contingency. Many companies out there don’t mind bending laws so that they can defraud you of your hard earned money. You have rights as a consumer. A knowledgeable and experienced consumer rights attorney can help you fight for your rights against unethical companies who want to use you for their gain.