Help! I Can't Pay My bills! - Savings and Sangria

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This post was originally published in June of 2017; here’s the new and improved version!

Most of us, at one time or another, have had a moment of, “OMG, I can’t pay my bills this month. What the ever-loving F am I going to do?!” If you’re at this point, know you’re not alone!

Sometimes your best-laid plans are sent reeling by an emergency or unexpected bill. Which is why you should have an emergency fund, but now’s not the time for lectures 🙂 And sometimes, honestly, bills just kinda sneak up on you. Maybe you thought you had more spending room than you did. Or maybe you took on more debt than you could handle.

Whatever happened to get you here, everything will be ok as long as you face it head-on. This is not an ignorance-is-bliss situation. This is an ignorance-could-screw-you-for-years-to-come situation. You already know you could be evicted for failing to pay rent, have your electricity cut for failing to pay the electric bill, and incur late fees and penalties for any missed payment.

But there are more subtle consequences too. The miserable calls from creditors. The mailbox full of envelopes with threatening “final notice” stamps. Paying late or missing payments can also negatively affect your credit score. That could mean you pay higher interest rates when you take out a home or auto loan years later. And that could cost you tens of thousands of dollars!

We understand the stress, panic, anger, fear, and even embarrassment. It sucks. We’re sorry you’re going through this.

But, before you resort to drug dealing or mercenary work, read this post. We have some tried and true tips to help you get out of this temporary misery and get on with your happy life. You can conquer this!

Short-Term Solutions

Ok, you have bills this month that you can’t pay. How do you survive this month?

Notify Your SO

If any part of your finances is combined with your significant other, let them know there’s a problem. Yeah, it might be an icky conversation, especially if there’s blame to go around.

But TV has shown us time and time again that your SO will find out and will be more mad about the secret than about the money. Also, if he doesn’t realize there’s a problem, he might be accidentally making it worse by spending as usual. And who knows, maybe he has a solution in his pocket. So tackle the icky conversation, try to rise above any blame, and work together on the solution.

Try to Earn a Band-Aid Income

There are some legit ways to make quick money. Can you sell something on eBay or Craig’s List? Can you offer to run errands for neighbors on TaskRabbit? Or maybe drive for Uber?

Consider the ways in which you could earn the money to cover your expense this month before you move on to any more drastic alternatives. Here are some ideas to get you started:

A little creativity, and you might be able to make the money you need this month.

Decide which Bills to Pay First

If you can’t find a way to cover all your bills, you need to prioritize. Different bills carry different late fees and different penalties for failure to pay. Failing to pay rent could lead to eviction, while failure to pay your cable bill leads to having your cable cut. Plus late fees, credit score hits, etc.

Your circumstances will vary, but here are some general guidelines for prioritizing bills:

Rent: Each state has its own eviction laws, but as a former California Property Manager, I can tell you, you only have to be a few days late to get an eviction notice. Rent was due on the 1st, and if we didn’t have payment by the 4th, I had to send 3-Day Notices to Pay or Quit. That meant the resident had three days to pay in full (including the late fee) or the eviction process would begin. And every 3-Day Notice was logged, so even if we never had to process an eviction, the late notices were noted on the residents’ rental history, making it harder for them to rent their next apartment.
Necessary Utilities: You don’t want your power or water turned off!
Child-care: Don’t mess with the person taking care of your child.
Secured loans: Secured loans cover anything that could be foreclosed or repossessed like your home or car.
The bill with the highest penalty: With all the necessities paid, you should go through your remaining bills to see how much the penalties would be if you were late. Those with the highest penalty should be paid first.

And if there’s a bill you really can’t pay this month, it’s time to reach out to that creditor or company. Which leads us to the next step…

Contact Your “Can’t Pay My Bills” Creditors/Companies

Too many people panic when they hit this kind of financial trouble and try to hide it from their creditors. This is the opposite of what you should do! Your creditors might be able to help you!

See, every time a creditor lends you money, they are taking a risk that you might never pay it back. So if you let them know you’re having trouble paying them, they will want to work with you to make sure they’re getting as much of their money back as possible.

Here are the ways they might be able to help:

First, ask if they can lower your interest rate to make the payments affordable. This would be ideal for you because it would lower your monthly payment and the overall interest you have to pay.
If they won’t do that, ask if you can spread the payments over a longer time-frame. This isn’t ideal because you will be paying more overall. The added time means added interest payments. But if you’re at a place where you’re in a hole month-after-month, this is an option to lower the monthly payment so you can pay all your bills.
Ask if you have any other options. Student Loans, for example, have a few unique options like deferment (putting your payments on hold while you get back on your feet) and income-driven repayment plans (matching your payments to a percentage of your income) under certain circumstances. The best way to find out what options you have is to ask! If you haven’t already considered refinancing your student loans to reduce your interest rate and payments, you should look into it.

Companies (like your cable provider or gym or whatever), unlike Creditors, can always just stop your service. So they are less likely to be helpful. If you let them know, “hey, I can’t pay my bills this month,” they might offer some help to keep your business, like waiving a late fee just this once, but they don’t have the incentive creditors do.

If you are able to get these companies to agree to an extension or waived late fee, follow up in writing so you can prove it later if something goes sideways. And remember: their services are not necessary for survival, so you can always consider downgrading or canceling service too.

Last resorts:

Ok, you tried all those things and you’re still short. What now? Well, here are some last resort options. Again, last resort. As in drastic. Don’t resort to these options unless you absolutely have to.

Sell the unexpected

If you have no moral objection, you can sell sperm (up to $1,000/month), eggs ($8,000 on average), or plasma ($20-$50 up to twice/week). If you do have any objection to making money this way, please, for goodness’ sake, don’t do it!

Borrow from family

There are several reasons not to borrow from family.

It’s adding another debt to the bills you already can’t pay. That’s the opposite of what we’re trying to do here.
Sometimes your family makes it really easy to borrow money, so then it becomes a habit.
Borrowing from family makes things weird. It creates guilt and resentment. And I don’t want to feel that way about my family or make them feel that way about me.

If I can’t pay my bills, I’m looking elsewhere!

Charge it to your credit card

When you’re unable to pay your bills, charging anything to your credit card will dig you deeper in your hole. Just like borrowing from family, you’re adding to the bills you already can’t pay. And adding ongoing interest payments. It’s an option, but it’s gross.

Send partial payment

Sending partial payment won’t necessarily avoid late fees or penalties. It also won’t necessarily keep the company from dinging your credit score. But it shows that you’re trying. It’s a good-faith gesture that might make the company more likely to want to help you. And if the company ever tries to sue you over the debt (Heaven forbid!) it would also help your defense show the court that you’re already doing everything you can.

Take out a payday loan

Payday loans are short-term loans to cover your bills until payday. You’ll notice we don’t have any links anywhere on Savings and Sangria to any payday loan company. That’s because they are dangerous, and you should not use them unless your life somehow depends on them!

The main problem is the stupid high interest rates. They might charge a $15 fee for a 2-week $100 loan. That’s a 391% APR! Your crazy high 24% APR credit cards are a no-brainer by comparison! Payday loans are basically just a shortcut to bankruptcy, and you do not want to resort to bankruptcy! It will make your life harder, and who needs that?

Long Term Solutions:

Ok, you decided on a short-term solution to survive the immediate crisis. Time now to come up with a long-term solution to make sure you don’t have to go through this again!

Get Organized

The first step is to get organized. You need to know how much cash you have coming in each month and how much is going out. How else will you be sure you can cover all your bills and expenses each month?

Btw, this list of cash in and cash out is also known as a Budget! If you haven’t created a budget before, that’s basically all there is to it.

When making your budget, you should also pay attention to timing. What if all your bills are due at the beginning of each month, but you can’t pay them all until your second paycheck of the month? You can always contact your creditors and see if you can just permanently change the due date.

You need to make sure you have enough money coming in to cover all expenses AND cover savings. Building up an emergency fund of savings will help you avoid a future recurrence of can’t pay my bills!

Once you know how much money is coming and going, you really only have 2 options: spend less or earn more (or do a little of both!).

Spend Less

There are some obvious ways to reduce spending. Swap MAC for Maybelline. Buy generic grocery brands instead of Chobani and Special K. Shop at TJ Maxx instead of Macy’s.

But in our increasingly flexible world, we now have wiggle room for almost every expense. With so much competition for your business, many utility and insurance companies are willing to negotiate. Do a little comparison shopping. Then call your providers to see what they can do to reduce your payments and keep your business. This legwork now can save you money each and every future month!

Even rent has some wiggle room if you’re willing to use it. Apartments often offer specials like one month free with a 12-month lease, which could make a move worth your while. Especially if it’s to a less expensive place. Yeah, that’s a dramatic change. But depending on your circumstances, it might be worth considering.

Of course we have plenty more ways to save money each month on expenses.

Earn More

It’s usually harder to earn more than to spend less, but it can be done!

You can ask for a raise or charge more for your freelance services. Check out our Do’s and Don’ts of Asking for More Money.

Or start a side hustle. We can show you how to launch your new side hustle in under 2 weeks!

You have unlimited opportunities to earn more, it’s just a matter of your time constraints. So make sure you’re budgeting your time along with your money 😉

Crisis Averted!

Ok, you’ve got your band-aid solution to survive the month and your long-term plan to move forward stronger and better than ever! Here’s to hoping you’ll never again have to think, “Help, I can’t pay my bills!”

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Help! I Can’t Pay My bills!