Sometimes you must make hard decisions. If you’ve found yourself in a situation in which your expenses outweigh your income, you’re going to have to decide what to keep and what to let go. You’re also going to have to figure out how to prioritize your bills if your cash flow is slow.
Here’s where to start.
The Essentials Are Essential
Everybody needs food, shelter and utilities. These should be covered before you even think about paying for anything else. As long as you have those three you’re in a good position to make more money. Your car payment comes next, then insurance, credit cards and student loans.
Pay What You’ll Lose First
If things are so tight you must choose between the three main priorities, juggle the utilities. Electric bills, phone bills, water bills and internet usually come with grace periods. You can be a bit late with those here and there and not run any real risk of losing them—for a while. If the telephone company is threatening to cut you off, do what you can to make them as whole as possible. Ditto the others, but not at the expense of food and shelter. Those should be the last to things you let go. And, find a less expensive place to live.
Keep It Real
If your situation is dire and you’re going to need someone to stick with you for a minute before you can get to them with some cash, let them know right away. Call them up, tell them you know they’re due, but things are hard for you just now. Promise to catch them up as soon as you can and promise to stay in touch until you can—then do it.
Be apprised, this probably won’t make a huge difference with a bank or a credit card issuer, but if you have accounts with smaller businesses, like doctors and dentists, they’ll be glad you were upfront about it and will remember you did so when you get back on solid footing.
If you’re renting, tell your landlord what’s happening and see if you can get a temporary reduction. If you’ve been a good tenant and always paid on time, they’ll be inclined to work with you—for a little while.
Put Something on It
If you don’t have enough cash to cover everything in full, it never hurts to put a little bit on it each month. That at least tells people you’re trying. If the bill is $600 and all you can afford is $200 so you can keep everything else going too, send the $200 with an explanation and a promise to catch up. This will usually satisfy smaller businesses. Credit card companies usually aren’t as forgiving. However, if you call them when you see trouble coming and tell them what’s going on, you might be able to negotiate a lower minimum payment and/or a reduced interest rate.
Consider Debt Relief
If you’ve tried and tried and tried and things aren’t turning around, looking into some form of debt relief might be in order. If your credit is still strong you might get a consolidation loan to make things easier to pay. If that’s not an option, you might consider credit counseling or debt negotiation. If you’re thinking of going this route, thoroughly research each company before signing up. We find these Freedom Debt Relief reviews especially useful in that regard.
Life can be cyclical. Tides go out and they come back in. This is why it’s important to understand how to prioritize bills if your cash flow is slow. These tips will help you keep life on an even keel until you’re in deep water again.