Budgeting When You’re Behind on Bills: A Survival Guide

Are you feeling overwhelmed by mounting bills and a tight budget? You're not alone. According to a recent survey, 63% of Americans are living paycheck to paycheck and struggle to make ends meet. 

But don't let the stress weigh you down. There is hope!

With a little bit of planning and organization, you can get back on track and regain control of your finances.

First things first, take a deep breath. It can be overwhelming to think about all of the bills you need to catch up on, but it's important to remember that you're not alone. There are many resources and strategies you can use to get back on track.

Let’s dive in.

Breaking the Pattern: How to Catch Up On Bills When You’re Behind

In this article, we’re going to go over practical as well as psychological tricks to help you catch up on bills when you’re behind. 

First, we’ll start with the practical side of things, so here are 7 actionable tips to help you create a monthly budget and catch up on bills:

1. Start by Making a Plan.

Creating a monthly budget is the first step in getting your finances back on track. Begin by listing all of your monthly income and expenses. Be sure to include fixed expenses like your rent or mortgage, car payments, and insurance, as well as variable expenses like groceries and entertainment.

Next, take a look at your income and expenses to see where you can make cuts. Can you cancel a streaming service or gym membership? Are there any phone or cable bills you can reduce? Look for areas where you can trim your expenses without sacrificing the things that are most important to you.

Use this free monthly budget packet to create your plan. Stick to it and adjust every month as needed!

2. Call Your Creditors.

If you're having trouble making your monthly payments, don't be afraid to reach out to your creditors. Many companies offer payment plans to help customers who are struggling to catch up on bills. You may be able to negotiate a lower interest rate or extend the length of your loan. Feel free to read my previous blog on how to negotiate lower rates for more details.

3. Build an Emergency Fund.

An emergency fund can help you cover unexpected expenses, such as car repairs or medical bills, without having to resort to high-interest credit cards. Aim to save enough money to cover three to six months of expenses.

It might seem impossible to build an emergency fund when you’re already behind on your bills, but remember, Rome wasn’t built overnight. Take your time. It’s better to put even a little bit into your emergency fund than nothing at all. If you need encouragement, think about it this way: Building an emergency fund now could help prevent a financial emergency in the future.

4. Keep an Eye on Your Credit Score.

Your credit score is a reflection of your ability to repay your debts. Late payments can have a negative impact on your score, so it's important to make sure you're paying your bills on time. If you only recently missed a payment but have a long history of making payments on time, try calling your creditor to see if they can waive the late fee.

Feel free to ask whether or not they’re reporting the late payment to the credit bureaus. If they are, explain your situation. If you have a history of making payments on time but only recently got behind due to a sudden job loss or similar situation, they may give you a temporary grace period.

5. Look for Extra Money in Different Places.

Many people are able to find extra money in their budget by cutting back on unnecessary expenses, such as eating out or buying expensive clothing. Others find extra money by working a part-time job or freelancing on the side. Consider trying a side hustle to boost your income.

6. Make the Minimum Payment, Then More.

When you're struggling to catch up on bills, it can be tempting to only make the minimum payment. However, this can lead to high interest rates and additional fees. Aim to pay more than the minimum payment each month to help reduce the amount of interest you pay over time.

However, if you’re already behind on your finances, it’s okay to make the minimum payment until you’ve regained your footing. Baby steps are better than no progress at all. If you need time to get back on track financially, begin by making the minimum payment, then as you can, begin accelerating your debt pay-off.

7. Don't Ignore Your Financial Situation.

Ignoring your financial situation will not make it go away. It's important to face your financial challenges head-on and take steps to improve your situation.

This might sound like a given, but a lot of people put off their financial problems until the problem is too big to ignore. Don’t forget that the bill always comes due. The sooner you begin tackling the problem, the sooner you will be free of it!

Catching up on bills can be overwhelming and emotionally taxing, but with a little bit of planning and organization, you can regain control of your finances. 

In short: Start by creating a monthly budget, calling your creditors, building an emergency fund, keeping an eye on your credit score, looking to make extra money, making the minimum payment (or more, when possible), and not ignoring your financial situation. 

Take it one step at a time and don't be afraid to ask for help if you need it. A financial advisor or credit counselor can provide valuable guidance and support.

Mind Over Money: Psychological Tips to Get Back on Track

Budgeting and getting back on track with bills can be a daunting task, but it's important to remember that it's not just about numbers, it's also about mindset. Here are 8 psychological tips to help you stay motivated and on track:

1. Set specific, measurable goals.

Instead of just saying “I want to save more money,” set a specific goal such as “I want to save $500 for an emergency fund by the end of the month.” Having a clear and measurable goal will make it easier to stay motivated and on track.

2. Break it down.

If the task of catching up on bills seems overwhelming, break it down into smaller, manageable tasks. For example, instead of thinking about the entire amount you owe, focus on making one payment at a time.

3. Celebrate small wins.

It's important to celebrate small milestones along the way. Every time you pay off a bill or save a certain amount of money, treat yourself to something small, like a cup of coffee or a movie night.

4. Use visualization.

Visualization is a powerful tool for achieving goals. Close your eyes and imagine yourself catching up on bills and achieving financial stability. Picture yourself paying off debt, building an emergency fund, and having enough money to enjoy the things you love. If you want some inspo, I encourage you to check out my video on how to set up a budget station!

5. Surround yourself with support. 

Surround yourself with people who will support and encourage you on your journey. Share your goals and progress with friends and family. If you’re married, dating, or partnered, try to get on the same page as your significant other.

6. Find an accountability partner.

In addition to support, having an accountability partner can be a great way to stay motivated and on track. Find a friend or family member who is also working on their finances, and set up a system where you can hold each other accountable and celebrate each other's successes. Maybe it’s a weekly text or video chat – just something that keeps you motivated and accountable!

7. Change the way you think about money.

The way you think about money can have a big impact on your ability to manage it. Instead of thinking of money as a source of stress and anxiety, think of it as a tool that can help you achieve your goals and live the life you want.

8. Reward yourself. 

Treat yourself for reaching your milestones. When you reach your goals, reward yourself with something that you have been wanting.

Remember, budgeting and getting back on track with bills is a journey, not a destination. It's important to be patient and kind with yourself, and to remember that setbacks are a normal part of the process. With the right mindset and a bit of planning, you can achieve your financial goals and take control of your finances.

Need a place to find emotional support for your finances? Looking to share your wins and victories with a community that cares? We invite you to join the TBM Family on Facebook. Hope to see you there!