An expense here, a new credit card there. Repeat the process a few times and the next thing you know you have a stack of bills to pay every month. Having too many bills is a situation that’s ripe for financial ruin. If you don’t change something soon, your money troubles will only get worse. Exhausting your income each month is one of the spending habits that can lead to debt. Particularly if you’re using your credit cards to fill in gaps.Many of us experience a point in life in which we have more bills than income. Debt might be piling up, and you also have other bills, like rent and insurance, to cover.
Eliminating some of those bills is often the best solution.
See where you stand
One of the reasons that you feel overwhelmed when you have more bills than income is that you aren’t in control of the situation. Knowing where you stand is a good first step toward taking control of your finances.
Sit down with all your bills and find out what you owe. Sort through your bills and consider your income. Don’t try to do it all by memory; you won’t remember all the bills you pay each month. Use your monthly statements to help start the list. If you’ve signed up for paperless billing, print the statements from the internet. Review your account to see which bills you’re paying every month to fill in any bills you may have missed. The list might get overwhelming, but don’t worry. This is a necessary step in simplifying and de-stressing your financial life.
The list, while time-consuming, will be instrumental in helping you get your bills under control. You may be paying for things you didn’t realize you were paying. e.g. subscriptions you forgot to cancel or services you no longer use.
Trim the Fat
Experts estimate that most households waste between 10% and 15% of their monthly income. This means that you probably have some fat to trim from your budget. Go through your spending and identify the items that are unnecessary.
Are there services you can consolidate? For example, can you get your homeowner’s, auto, and other insurances through the same company? Perhaps you can bundle your cable, internet, and home phone? (Or get rid of the home phone all together, especially if everyone in the house has a cell phone.) If everyone in the house is on a different cell plan, consider moving to a family plan. You may even save money by combining plans.
Get rid of some bills
Are there bills you can pay off? You may have some small outstanding bills that you can pay off and cut them complete.
Are there some bills you can get rid of? Consider all your recurring monthly services and memberships. There may be some of these you can cut to simplify your bills and to save money, especially if you don’t use them
The more bills you can cut, the more room you’ll have in your budget.
Deal with the people you owe
When you have more bills than income, chances are that you will, at some point, have to deal with debt collectors.
As you try to get on top of your situation, you might need a little breathing room. Discussing financial difficulty is not an easy process. You may be surprised to learn that many companies are willing to work with you. For example, you may be able to pay your past due balance over several months or have your late fees waived.
This is perhaps the most important step of all. When it’s time to get rid of expenses: avoid saying “I can’t get rid of my subscription to the Cosmopolitan magazine because <insert excuse here>.” If you have too many bills, you have to let some of them go. It’s that simple. Rationalizing why you should keep unnecessary services will not help. You have to make the hard decisions. Tough sacrifices if you want your financial situation to get better.
Saying you “can’t” do something places you in a position of powerlessness. And leaves you unable to do anything. But, when you change your mindset, you empower yourself to make the changes necessary to get in a better financial position. When you say “I can” rather than “I can’t,” you stop making excuses and start coming up with alternatives.
Re-Establish Your Credit
When you’ve been dealing with this problem, your credit is likely to be affected. Part of getting back on track is re-establishing your credit.
You should also check your credit report for inaccurate information and have it corrected. For the most part, though, the best thing you can do is reform your finances. And start using credit again in a responsible manner. Once you have made payments on time, and in full, you should start seeing improvements in your credit situation.
If you’re having financial troubles, the worst thing you can do is sit idly. Your finances won’t correct themselves. Instead, it’s up to you to take control and turn your financial situation around.