Are you behind on your bills and wondering how to catch up? Well, you have come to the right place.
In this post, I am going to cover 11 tips you can implement in your financial life to help you get back on track and finally get ahead.
Now, just so we’re clear, I’m not going to sit here and tell you that becoming current on your bills is going to be easy. If it was, then you wouldn’t be reading this article, or you wouldn’t have fallen behind in the first place.
What I will tell you, is that the more disciplined you are about following these principles, and the more willing you are to make sacrifices in order to improve your financial situation, the quicker you will catch up. And in all honesty, you will probably get well ahead of the game.
Let’s get started.
Important: Your financial successes and failures are a direct result of your own discipline, knowledge, and hard work. We do not make any guarantee that the tips in this article will work for you. Rather, these are just tips that worked for us. You are responsible for your own financial decisions.
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1. Crunch The Numbers And Get Everything On Paper
There are few things worse than knowing you are behind on bills. So, before you can start catching up, you need to get every single bill you owe on paper. Until you do this, there is no way to create a defined plan to catch up.
This will help you organize your thoughts and eliminate a lot of the overwhelm that comes from a disorganized financial life.
You should write down every single payment you need to make, and you should add up the total amount of money you need to pay in order to catch up. Hiding from your bills won’t help anything.
Like cleaning a wound before you sew it back together, it’s necessary that you get everything out in the open. This is the first, critical step you need to take if you want to begin to repair your financial situation.
2. Learn From Your Past
Before you make a plan to catch up on your bills, it’s important to look back and figure out why you ended up in this situation in the first place. I mean, the last thing you want to do when you catch up on your bills, is to end up falling behind again.
So, to prevent that from happening, you need to look back into your past and determine what you could have done differently to avoid falling behind. More importantly, you need to actually do whatever it is that will keep you from repeating the same pattern.
For instance, if you are behind on credit card payments, the easiest way to prevent that would have been to shred your credit cards, and not use them at all. So, go and literally run your credit cards through a shredder.
If you are behind on your car payment, you could have prevented that by saving up and paying cash for a car you could afford. If you never take out a loan to purchase a car, then you can never fall behind on the payments. Therefore, commit to paying for all your future cars outright.
If you are struggling to keep up with the payments on some medical debt, then chances are, you didn’t have a big enough emergency fund saved up to pay for them outright. So, the moment you catch up on your bills, your first order of business should be to save up enough money to cover any future medical expenses.
In my opinion, this is one of the most difficult, yet beneficial things you can do in personal finance. You need to be brutally honest with yourself, and really address the cause of your current financial situation. If you don’t learn from your past, then you are much more likely to repeat it.
3. Get On A Strict Budget
If you are behind on bills, you need to take a chainsaw to your day-to-day expenses and get on a strict budget if you want to catch up. And when I say budget, I’m talking about an actual, written budget that lays out exactly what you are going to do with every cent you earn.
And the further you are behind on your bills, the more you need to cut from your budget. For example, if you are behind on your electricity bill, there’s no reason you should be paying for cable. Your television won’t even work without electricity, so cancel your cable and get your priorities straight.
If you are behind on your mortgage payments, then you shouldn’t be spending hundreds of dollars on a car payment each month. Your home is more important than your nice-looking car. So sell your wheels and buy a high-mileage car you can pay for in cash. Or better yet, take the bus, or pay for a coworker’s gas in exchange for a daily ride to and from work.
Cut every expense you can find, and squeeze every last penny out of your monthly budget.
A loose, “convenient” budget that groups your spending into two or three categories is not even close to good enough. So, break out a spreadsheet, plan out every penny of your income, and track every single purchase you make — daily.
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4. Prioritize The Essentials
If you are behind on a few different bills, and you’re not sure how to get started catching up, you should focus on the essentials first. Seriously, I mean food, water, shelter and heat.
In other words, focus on paying your rent or mortgage, your utility bills, and groceries.
Credit card companies may hound you relentlessly, but that’s better than risking the bank foreclosing on your home, or your kids not having enough food to eat. Prioritize the essentials first, and then move on to any other bills.
5. Negotiate Your Bills
If you have never negotiated before, now is the time. You should make a call to every single company to which you owe money, and try to negotiate a lower amount. The majority of them will probably say no, but even if one or two are willing to work with you, then it was worth the effort.
When you are behind on bills, you need to do everything in your power to improve your situation. And until you pick up the phone and ask, you won’t ever know.
6. Get A Second Job
A little extra money can go a long way when you are trying to catch up on bills. Even a couple hundred extra bucks a month can be the difference between falling further behind, and finally getting ahead.
Now, for some, getting a second job is a pretty humbling experience. But, when you owe other people money, it doesn’t matter how you feel. You just need to do what it takes to pay them back.
There are so many part-time jobs out there. Heck, even delivering pizzas can net you over a thousand extra dollars of income each month.
You don’t have to work a second job forever. You just need a temporary income boost until you can catch up and get ahead.
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7. Start A Debt Payoff Plan
If you are behind on bills, then you need to focus on getting out of debt. Whether it’s credit cards, student loans, car loans, or a big mortgage, debt adds an unnecessary level of complexity to personal finance.
Think about it, if you didn’t have any debt, would you be behind on your bills? I’m willing to bet debt is almost entirely the cause of your financial struggles. And that’s why you need to get rid of it as fast as possible.
Here, at Be The Budget, we recommend the Debt Snowball method. My wife and I used this method to pay off over $34,000 of debt, and it is still the best financial decision we have ever made.
If you are interested in getting out of debt, then be sure to check out our Free Debt Snowball Calculator. You might be surprised by how little time it will take you to become debt-free.
8. Learn About Personal Finance
One of the best decisions I ever made — along with getting out of debt — was when I committed to learn the ins and outs of personal finance. And if you are behind on bills, I can’t recommend this enough.
So, crack a book about personal finance. There is just no substitute for a good book on personal finance. It’s like getting exclusive access into the thoughts of some of the smartest financial minds.
I also recommend following a good personal finance blog, namely, Be The Budget, but there are a ton of great blogs out there.
No matter what method you choose, just make it your business to expand your knowledge of personal finance.
9. Focus On Financial Contentment
If you spend a lot of time comparing your life to those around you, then it’s time to stop. The only financial situation that should matter to you is your own.
Sure, some people may have a nicer car than you, a bigger house, or more expensive clothes, but that shouldn’t matter one bit. Rather you should focus on finding contentment in your financial life, while living below your means.
In reality, many of the people you envy are probably in tons of debt anyway. And do you really want to copy that lifestyle?
Instead, focus on finding contentment with your own financial situation, and work each day to improve it.
10. Save For Emergencies
When you finally get caught up on your bills, and pay off all your debt, you should shift your focus to saving an emergency fund. I have heard people say this fund should cover anywhere from 3 months, to an entire year of living expenses, but I recommend 6 months of emergency savings.
Having an emergency fund is the best way to prevent yourself from ever falling behind on bills again. Plus, there is just something about having a big pile of savings that makes unexpected expenses feel like less like an emergency.
11. Put Your Money To Work
If you really want to get ahead, once you have your emergency fund in place, you should start investing your money aggressively. Sure, saving money is good, but it doesn’t really put your money to work.
The only way to build big wealth is to use the power of compound interest to your advantage. If you do this consistently, for a long enough time, your investments may actually become your primary source of income.
If you are behind on bills, there are a number of things you can do to turn things around. If you just take a breath, get everything on paper, and execute a plan to catch up, you will be back on track before you know it.