Steps To Take When Just Can’t Pay Your Bills

Life is full of ups and downs. Some of the most stressful can be the bumps in your financial life, especially when you can not see any hope in the near future. Whether these financial bumps are from unexpected emergencies, unemployment, or chronic low income, there are a few steps that you can take in order to lessen the stress and, perhaps, find a way out.

Where Does The Money Go?

That is usually the first question that people ask themselves when their bank account is empty and there are still bills to pay. Not knowing where your money goes can also be a major contributor to the situation. Every person or family should have a way to track their every expenditure. You can start by writing down each of your monthly bills:  what they are, who the money goes to, how much, and when the bill due. The list needs to be very detailed, so include groceries, gas to get to work, parking, anything that you have to pay regularly in order to survive. This list of bills is a solid foundation for a budget.

Once you have made out your list, you can move on to keeping track of other cash outlay. Items like a soda when you fill up the gas tank, coffee and donuts, money dropped into a vending machine, everything that you spend cash on needs to be written down so you can visualize and eliminate the ways that you are wasting your money.

Face Late Payments Head On

One sure way to make things worse is to ignore the problem. If you know that you are going to be late, contact the company that you owe money. Many companies will waive late fees and penalties if you contact them. In many cases, a phone call is the only way to avoid having your utilities and other services disconnected. Of course, this will only work so many times.

Often, if the current situation is a result of unemployment or disability, many lenders have policies in place to help you avoid suspension of your credit card accounts, repossession, or foreclosure. These can include an extension of the loan or interest only payments for a short time. You will never know if you do not make the call

Back To The Bills

If this bump in the road is going to last for awhile, it is time to make some tough choices. Pull out that list of recurring payments. You will have to trim that back. You may need to turn off the cable and land line package for a few months. Even worse, the internet may have to go as well. What’s next? Can you trim your grocery bill by changing your shopping habits? Name brand and organic items add tons to your bill and are often a waste of cash. Can you eliminate alcohol and tobacco, or at least cut back?

You can save money on your heating/cooling bill by lowering the thermostat two degrees in the winter and raising it two degrees in the summer. When you are at work, you can go ten degrees lower/higher depending on the season. The EnergyStar people estimate that you can save $500 a year or more just by changing your thermostat setting while you are at work.

Plan For The Future

The only way to prevent this financial cycle from happening over and over again is to plan your way out of it. The best place to start is your list of cash outlays. Does the list show you that you shop too often? Does it show glaring areas where you regularly waste money? If so, simply changing those habits may be the key to success. On the other hand, if you have a bare bones budget and rarely shop, the issue could be chronic low income.

If low income is the issue, how can you make more money? Do you have a marketable set of skills? Every one has a skill, finding is often the issue. Can you walk dogs, mow grass, deliver newspapers? Is a lack of education holding you back? What about getting a GED or finding a short certificate program at a technical school?

These are just a few ideas to help you find a way out of your financial crisis. The most important step you can take is to create a written list of your bills so you can form a concrete budget. If you have any other ideas, feel free to tell us about them. Perhaps your tip or story could help another one of our readers.

Is it Really the Right Time to Buy a New Car?

Have you got the fever for a new car? Maybe it’s that new Scion FR-S, or the Mercedes C-Class, or one of those rugged 4-door Wranglers? The research firm Polk has data that indicates Americans buy a new car every 6-8 years until they reach the age of 76 when they stop buying cars altogether. But you’ve got to ask yourself:  is it really the right time to buy a new car? There are no hard and fast rules about when or how often you should buy a new car; however, there are items that you should keep in mind when trying to decide if and when you should buy one.

Is Your Existing Vehicle Paid Off?

The first thing that should cross you mind before you buy a new car is whether you still have a balance left on the loan for the last one. If you have a loan balance that is greater than the trade-in value of your car, you should wait to buy. You do not want to start a new loan with a large amount of negative equity. If you do, you may find yourself required to carry some very expensive gap insurance.

Is Boredom Your Motive?

Secondly, why are you considering a new car? Is your current one in need of expensive repairs? If the only reason is that you are tired of it, then consider this…you will get tired of the next one too. Why not keep on being tired of this one for another year or two, pay off your loan or, if it is paid off, why not put some money into savings. If you can save a little more for a down payment, you will keep your next payments low and pay less interest.

Why Wouldn’t a Pre-Owned Vehicle Meet Your Needs?

Lastly, do you really need a new car? Would a used one meet your needs just as well? There are plenty of reliable certified used cars on the market, many of which still offer part of the factory warranty. You can secure big savings by opting to buy pre-owned. How big? Well, a new car is loses 40% of its value after just two years, and 50% after three years. So you can get a car with low miles and little wear-and-tear, which costs several thousand dollars less. Put those saved funds in savings, or invest them prudently, and you’ll be in a much better financial position for years to come.