How To Budget When You Are Behind On Bills

Many of us have been there.  For one reason or another, we fall behind on the bills.  We run into an unexpected financial disaster, or we get lazy and stop following the budget or anything else in between. Here is a way to work the budget when you have fallen behind.

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Step One.

Stop spending money.  Seriously.  You are in crisis mode as of this minute, so all spending is frozen. Let me repeat for a dramatic effect.  STOP.  SPENDING.  MONEY.

Step Two.

If you have the capabilities of getting a paper check still, cash it, and bring it home.  I believe working with the cash that you have, makes getting out of a hole much more manageable.  If this isn’t possible, we will address this in a moment.

The four most important things to be paid are:

  • Shelter
  • Electric and heat
  • Transportation
  • Food

The credit cards and fun stuff like cable can wait.  If they turn off your internet, they turn off your internet.  Life happens. Pay your rent or mortgage first, then electric and heat if those are different and the season is cold.  Take care of car insurance, payments, and gas next.

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Step Three.

Last is the food.  However, this needs a little more explanation.  Let’s practice a little tough love with the groceries for a bit.  Take note of what you already have.  Go through your cupboards, pantry, refrigerator, and freezer and write down everything you have.  Time to get creative and come up with a couple of recipes for all that stuff you haven’t eaten yet.

Shop the bare bones of what you need.  This is not the time to worry about organics or fancy meals.  This is about getting as many nutrients into your bodies for as little cost as possible.

I have a grocery ebook that is filled with great ideas for groceries on a small budget.  Please consider subscribing for your free copy!

Grab $20 and pick up some essentials that can be added to what you already have.  Remember, shop frugally.

Step Four.

If your account at the bank is in the negative, you will have to get that cleared up first.  If your mortgage is taken out automatically, let that happen.

Pay the necessities listed above first.  Anything that you can pay with cash or money order, I suggest doing that.  The stress of it getting returned or declined is gone.  You need to decrease as much stress as you can right now.

After all of the automatic withdrawals have been accounted for, take out that cash.  Cash is tangible.  You can see it, feel it, smell it and manage it.  When you spend $20 on groceries, you watch that $20 bill leave your hands, and you know it has been accounted for.

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Step Five.

Pay on what is most important for you.  Is it the phone bill, credit cards, the loan from your Grammie, the cable/internet (seriously consider canceling cable right now).

If you don’t have anything left, start going through your home and finding things you do not use anymore.  List them and sell them.  Facebook Marketplace is great for this as well as Craigslist.  They do not charge, and you do not have to pay to ship.  Sell everything that you don’t need or use anymore.

Each pay period,  follow the same steps until you feel that you are caught up.  If you can’t catch up after a number of attempts, consider cutting some stuff out of your life (cut cable, sell the car) or finding a way to bring in more money (clean houses, babysit, elder care).

Because you are in survival mode, there should be no unnecessary spending going on.  Any kind of fun with a charge has to stop for a while!  Everyone will live.  It’s temporary.

Step Six.

Don’t let it happen again.  Set up a budget, have a small emergency fund, prepare for other expenses with sinking funds.  Prepare yourself.  Live your life and don’t let it happen to you.  Control where your money goes and be ready.

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Don’t give up.

You can turn this around.  You can get back on track and get things caught up.  It may not be easy and will require that you are paying attention and making sacrifices, but it will be worth it.

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