When you fall behind on your bills or debts, it can be an incredibly stressful situation. This happens for many reasons – whether it’s because you aren’t earning enough money to cover your expenses and deal with emergencies, or because you don’t have a workable monthly budget, or because you faced an unexpected expense. However, recovery is possible. You just need to focus and cut unnecessary spending so you can catch up on overdue payments. Read on to learn how to catch up on late bills or payments – and how to avoid repeating this situation.
Make a List of Overdue Bills
First and foremost, sit down and make a list of the bills you are overdue on and what you need to pay to become current. Before you can fix anything, you need to get organized. You should also have your current budget on hand. If you don’t have a budget, you should create one as soon as possible.
Prioritize Your Bills
Next, prioritize your bills. Arrange them in order of importance. Start with your mortgage or rent payment, then utility bills, and then other bills according to the amount or interest rate or late fees. It’s important to ensure you have a place to stay as well as electricity and running water. That’s why rent and utilities should come first. After that, you should stay on top of your car payment to ensure you can get to and from work.
Find the Money to Catch Up on Late Payments
Determine how much extra money you have each month to allocate toward overdue bills or payments. Additionally, when trying to catch up on bills, you should stop unnecessary spending. This includes going out to eat, going to the movies, and other forms of entertainment. You might also want to suspend cable service or any other non-essential monthly expenses until you can catch up on overdue payments. You may also consider selling some things you no longer use to earn extra money for repayment.
Talk to Creditors to Set Up a Plan
Once you’ve determined the amount you have each month to allocate toward overdue bills, you should reach out and talk with creditors or anyone you are behind on payments to. Many companies may be able to set up a payment plan with you to help you catch up on overdue payments. In fact, you should try to reach out even if you’re just afraid you’ll be late on a payment.
Look for a Side Job
You may need to work a side job for a short period to catch up on overdue payments. This job should be temporary, but it can help you regain control of your finances faster. You might want to consider part-time jobs that pay more than minimum wage, ensuring that all the extra money you earn goes directly toward the overdue bills.
Start Saving for Emergencies
Once you are current on everything, you should start saving money for an emergency fund to prevent this from happening again. It’s recommended that you save an emergency fund that covers at least 3-6 months of living expenses. You should also begin looking for long-term solutions to your income shortfall. You may consider looking for a job that pays more, or enrolling in a program or school to qualify for a higher-paying job.
Maintain a Monthly Budget
The next step (to prevent this from happening again) is to create a monthly budget and stick to it. No matter how much money you earn, you should always have a budget. Pay particular attention to variable expenses. You may be able to cut costs in certain areas without feeling like you are doing so.
Conclusion
You should
Your first priority when it comes to your finances should be to catch up on overdue payments or bills. After all, being late on bills can affect your credit score, which can impact your financial matters in the future. While cutting back on spending and working a side job may not be enjoyable, it’s important to take steps to catch up on your bills so that you are not just struggling but thriving financially.
Updated by Rachel Morgan Cotter.
Source: https://www.thebalancemoney.com/how-to-catch-up-on-late-payments-2385828
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