Losing a job or taking a severe cut in pay can leave you with more bills than money. This can be a terrifying feeling. When times are financially tough, it is important to focus on what really matters in life. You need to keep yourself and your family healthy and safe no matter how difficult things become. Keep your head on straight, focus on what you can do rather than what you cannot, and remember that bad times never last forever.
Take a good look at your lifestyle. When you are faced with getting by on less money than you are accustomed to making, you have to adjust to lowering your standards and living on less. This may mean giving up some of your comforts that are not necessities. For some that may mean giving up entertainment such as fine dining, concerts and regular movie nights. For others it may mean turning off the air conditioning and sleeping with a fan on and the windows open.
Changing your lifestyle means swallowing your pride. You will no longer be worrying about what others think or even about what you enjoy the most. At this point, survival is all that matters. And survival rests on you paying your bills and keeping your family fed. Nothing else matters until your income improves.
Lowering your bills is the next step after adjusting to a bare bones lifestyle. Make a list of all your bills. Pull all of your recent statements and decide what can be cut out. You will need to be honest with yourself about needs versus wants. When trying to pay your bills on a drastically reduced income, every dollar counts. Look for all the hidden fees and charges that are costing you extra money.
Lower your electric bill by turning off the air conditioning, hanging clothes to dry outside and remembering to unplug appliances when not in use. Look over your phone bill carefully. Get rid of call waiting, caller ID, voice mail and other extras. If you have a cell phone and a home phone, get rid of one or the other. You do not need two phone bills right now. Cut back to basic cable or get rid of cable all together. In the age of digital converter boxes, you are going to get a good signal without cable. Start clipping coupons; they are your best friends when money is tight.
Call your creditors. Negotiate lower minimum payments and interest rates on your credit cards. Put your student loans on hardship default. If you have a mortgage, call your bank and find out if you qualify for any programs to reduce your monthly payment. If you are a renter, consider moving to a more affordable location. You might even consider moving in with family temporarily to drastically cut your expenses. If you have medical bills, negotiate your balance down. Most hospitals would rather get some money than none.
Make a list of your bills and expenses. Include everything, including groceries and gas. Write a number next to each expense to order them from most important to least. Food and shelter should be the first two on your list. Next comes expenses related to your car because you need to get to work or have transportation to be able to find work. After that comes electricity. Every thing is a matter of preference—cable, phones, credit cards, other loans.
Pay your bills in order of most important to least. When you run out of money, stop paying bills. Your creditors may kick and scream but you will simply tell them that there is no money and you will feed your family before you pay a credit card bill. This is not a free pass to stop paying your creditors. Your credit will suffer from not paying bills but no one will die and nothing truly terrible will happen if you have a credit card in default. The priority when you are paying bills on very little money is to survive—food, clothes and shelter. Everything else can wait if necessary.