When you have more month at the end of your money.
At some point in our lives, almost all of us experience this. Its usually a cluster of things all going wrong at once. Maybe you lose our job, then your car breaks down, then your daughter needs braces, all with a week of each other. Its enough to panic even the most stress free person.
The good news is however, there is a way to cope. Once you know how to handle situations like this, it can make them not so scary.
Here are six steps to take when your debt and bills exceed your income.
1. See Where You Stand
The biggest reason someone feels so stressed and panicked in situations like this is they simply feel like there losing control and everything Is falling apart.
Sit down with all of your bills and a pen and paper and work out exactly how much you owe. Then work out your income and compare to the two to work out where you stand. Knowing where you stand can help immensely with working out a plan, then go from there.
2. Trim the Fat and Make More Dough
Did you know that most households waste 10% of there income? With some wasting up to 15%? What does that mean to you though, you ask? This means that you probably have some wiggle room within your budget somewhere, some fat to trim so to speak, and you might not even realise it. . Go through your spending and identify the items that are unnecessary, and be ruthless here. These are the things to cut from your budget immediately. Things like going out for dinner, that takeaway coffee, or a pay tv subscription such as Foxtel or Netflix. You might be surprised at where you can cut back.
Another great idea, sometimes even an essential, is to look for ways to increase your income. This might be anything from getting a part-time job, to starting a side gig, or even doing odd jobs. Selling some of your unused household items on Ebay or Gumtree can be a great help.
The goal here is to is to at least bring your income and expenses to the same amount, but ideally having your income exceed your expenses.
3. Prioritise Your Debts and Bills
Even after trimming the fat from your budget, you may still need to be careful and priorities your bills. Not all bills are of equal importance. Organise your bills and debt so that the most important ones are taken care of first. Look at any secured debts first. This will be your mortgage and car loans. These are usually the most important as you could lose important items.
Next, consider important bills like insurance and utilities. Those are your priorities.
Other bills, like unsecured credit cards, might not be as important and can probably moved to the bottom of your list for the time being.
4. Deal With Creditors and Debt Collectors
When you have more bills than income, chances are that you will, at some point, have to deal with debt collectors. It’s important to know your rights when it comes to debt collection.
As you try to get on top of your situation, you might need a little breathing room. Your best option is to call your creditors and explain your situation. In many cases, your creditors will help you come up with a payment plan that you can handle. However, sometimes you end up with debt collection calls. The good news is that you have rights. If your employer does not want them to call you while your at work, they can not do so. Additionally, they can only call between 8 a.m. and 9 p.m.
5. Consider Credit Consolidation
My last tip is to consider debt consolidation. Debt consolidation can be good when you have a number of small sized debts with various interest rates and due dates. Consolidating them into one can make it a lot simpler to manage so you just have the one monthly payment, instead of many.
If you are under financial stress or need any advice on these steps, or anything else finance related, I encourage you to follow this link and join my free Facebook community.