How to Get Back on Track When You're Behind on Your Bills
There may be many reasons why your bills have gone late. Whether you miss a bill deadline once in a blue moon or if you are consistently late and behind in paying your bills, it is time to get your financial life back on track and realize what the consequences are of paying bills late. (See also: Get Rid of and Avoid Late Fees)
First, the Consequences
No matter the reason for getting behind in your bills, know that you are doing damage to credit and your overall financial life. Late or missed bill payments drop your credit score significantly, and if you are paying all of your bills late or carrying a large balance from one month to the next, you are doing yourself no favors. Late payments will stay on your credit report for several years so you will feel the effects for many years to come.
In order to reorder your financial life, it is a must-do to start perfecting a strategy for paying your bills on time without fail. Here is a guideline for what to do to get current again.
Begin Eliminating Outstanding Debts
When people are behind in their bill payments, they generally are fully aware there is a problem but may not necessarily realize just how much of a problem they have. It is time to start reorganizing your system to ensure bills are taken care of and balances are eliminated in a reasonable amount of time. (See also: Why Can't You Make Your Payments On Time?)
Write It All Out
Gather in one place all of your monthly bills and anything with a balance showing. Review each statement or bill and write down on a separate sheet of paper who you owe, how much you owe monthly, how much you owe in total, and due dates for the amount to be paid.
Highlight the Worst
If there are some bills you are keeping up with monthly, it's a good start but you'll need to formulate a plan for keeping up while paying past due balances at the same time. Highlight the past due balances that need to be tended to each month.
Do the Math
Once all bills and balances are accounted for, add up the columns to find out how much is due each month. Any bills that you haven't been paying should have an amount of money allocated to them on a monthly basis. Say you owe $1,200 to your doctor on an overdue bill. Review your budget to find an amount you can afford to pay towards the debt each month and add that into your monthly totals.
Find a Solution
If you find your monthly must-pay amounts total more than you earn, resist the urge to stop paying back the balance. Your goal at this time is to find a way to make payoff possible. You may need to reduce other expenses from your budget or find a secondary source of income to allow your plan to work effectively for eliminating debts.
Consult With Your Creditors
You may already be getting contacted by creditors to whom you owe money. With a new strategy in place, you should have more confidence to contact your creditors directly and let them know of your intent to make a set payment amount each month. This can keep the lines of communication open between your and your creditors, who may choose not to take more drastic measures once they know you are trying to make good on your debts.
During the Debt Elimination Process
Commitment to eliminating debt will be essential, so stay very involved through the process. It may be difficult to allocate so much of your cash towards old, overdue debts but the end result will be well worth it.
Be Willing to Sacrifice
During the time you are working towards debt elimination to get back on track, you have to be willing to make sacrifices, including saying no to even the best deals and discounts.
Keep Your Own Records
Your creditors have probably kept very good records about the debts you didn't pay, but you owe it to yourself to keep good records of the debts you are paying. Keep track of how much you are sending each month to your creditors, and check statements to be sure everything is correct. Creditors can make mistakes, and you'll want to ensure they are not getting more money from you than they are owed.
Regularly Reallocate
If you have managed to pay off your old cell phone bill, you'll need to go back to your plan and reallocate the cell phone payment money towards another bill. Do this every time you eliminate one of your overdue bills to make your debts go away faster.
Avoid New Debts
You already know how hard debt elimination can be so why get yourself into the same mess twice? During your balance elimination plan, avoid new expenses like the plague. (See also: How to Paddle Back to Good Credit)
Living Life After Balances Are Zeroed Out
Once you have caught up on your overdue bills and have things back on track, your goal should always be to prevent history from repeating itself.
Set Up a Foolproof System
Today's technology can help you avoid the trap of forgotten or missed bill payments. Use one of the many available phone apps or online banking resources to automatically pay your bills on time each month. For bills that can't be paid automatically, post a calendar where you can always see due dates or set a reminder on your mobile device when a bill payment needs to be made.
Stockpile Your Cash
After eliminating your debt, you now know you have the willpower and commitment to having a better financial life. Eliminating old debts should not be the end of your strategic plan. Keep sacrificing for a few months longer as you stockpile the collective bill payment amounts into a savings account. If the reason why your bills were always late was due to a lack of money, a healthy savings account can certainly prevent history from coming back to haunt you. (See also: Savings Changes You Can Make Today)
Check Your Credit
As you are getting your bills back on track, make sure your creditors are on the same page. Order a copy of your consumer credit report and follow the progress you are making. Check in with your financial records every few months to make sure appropriate changes have been made and that your credit score is on the rise.
Don't let another month go by knowing you have unpaid or habitually late bills. A reasonable system to keep up with your bills is not very difficult to set up or maintain. It will be far easier to be proactive about your money matters than have to run scared from creditors for the next few years.
How do you keep pace with your bills? Do you have a system or do you just wing it?
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Tisha,
Solid post. It's something (most of us) struggle with at some point. While I maintain a very detailed budget, emergency expenses, gifts (wedding mostly, man they are expensive), and other expenses do pop up from time to time leaving some bills under the rug (CC, phone, etc). My first go-to move is to eliminate my leisure purchases immediately. Any clothing or luxury items that I would sometimes purchase, no longer even cross my mind. This helps me stick to the bare bones essentials. With these covered and my mind off luxury items I do not NEED, I can usually get back on track to my regular bill payments in a month or two. My advice to others is to mentally check out from purchases you don't need. If you can do this, you're one step closer to a sound budget.
Great advice. I got behind the 8 ball right after college when I was run over while riding my motorcycle. Nasty, painful mess.
The most important thing is make a payment every month, even if it's only one dollar. And notify your creditors that you're doing so and will repay the entire balance in full and when you expect to be done. They would much rather have the full amount, than heavily discount it by turning it over to a collection agency. As long as you keep paying, they'll be willing to work with you.
Stop paying, and you're doomed.
Really good advice. Debt can be paid off, but it's not an easy task, if you have a lot of bills that are outstanding.