What do you do when all of a sudden the month is just begi ing and the $$$$'s are gone? You put the
What do you do when all of a sudden the month is just begi ing and the $$$$'s are gone? You put the emotion away and get crackin' with bill priorities and some cold hard facts about your bills... and maybe even the priorities in your life. Believe it or not, some bills are definitely more important than others. Don't forget, this is an emergency!
Rent/mortgage - You aren't getting very far without a roof over your head. If you're looking at long term financial distre you may have to co ider selling or relocating, but clearly, housing is an e ential.
Utilities - Housing also mea utilities. E ecially if there are youngsters, don't even think of eliminating gas or electric. Reduce usage as much as you can but i ure you pay gas, electric, and water. The phone s a different story along with cable. The former is optional in moderation and the latter is "Get rid of it NOW!" until better times.
Child su ort - Unle jail is an option, child su ort is not. Plan to pay it.
Car Payment - If you need the car for a job, it is an e ential. If there is an alternate tra ortation, the car and i urance may have to be a non-survivor.
Secured Debts - Secured debts are those a igned to a collateral (house, car, furniture, etc.). Creditors can often live with a late or mi ing payment or even two. Contact the creditor and explain the circumstance, but definitely do not just ignore your creditor. Yes, your credit may be hurt, but we are dealing with an emergency and wounds will occur. If the disaster is long term you may have to co ider surrendering the property.
U aid Taxes - Negotiate payments but don't ignore this one. Co ider it child su ort to your government.
Food - Just because food is a priority, it doe 't mean filet mignon. Common se e rules in this area.
U ecured Debt - U ecured debt are those loa without property attached: credit cards, department store loa , gas cards, medical bills, loa from friends. (Note: Student loa should be co idered as a required debt.) Failing to pay these will eventually be very painful with your credit and good name but are probably the least devastating for the short term.
In Between Items - Medical i urance, children's "needs", and other debts unique to your circumstance will require a value judgment. How long is the emergency.. what can you live without... how bad is the situation... can the debts be delayed?
_______________________________________
The Proce
List all your bills and their expected amounts. Sequence them according to their priority to be paid 1, 2, 3, etc. begi ing with your mortgage as #1. At one of the priority numbers you will determine where "Must Pay" ends and "Should Pay" probably starts. Draw a horizontal line here and continue down the list. You might now reach a point of ending "Should Pay" items and find you are in an area of "Would Like To Pay". Draw another horizontal line.
Start paying priorities 1, 2, 3, ... until you're out of money or finished with "Must Pay". Determine your deficit to "Must pay" items. If you still have money, continue with "Should Pay". If you run out of money, place their amounts on your deficit list. If there is still money left, go onto "Would Like To Pay" until you run out. If there is no money or you run out, ignore the remaining list since they can be taken care of in better times.
Using your deficit list, contact your creditors. Many will be willing to work with you to skip a payment, lower interest, pay interest only for a month or two, or offer a number of other optio . Maybe they won't, but it won't hurt to ask. (Used judiciously, "accidentally" mentioning the po ibility of bankruptcy, sometimes yields major power.) Adjust your deficit list accordingly.
Optionally talk to a debt cou elor but not a debt co olidator. At the very least, try to share your list with someone you trust. Often times another set of eyes can see something more objectively or have ideas you never co idered.
Determine how to make up the difference on your deficit list with some of the following ideas:
Reduce expe es by a lying many of the frugal concepts at this and other sites. Take on a second job for the short term.
Have a garage sale. Sell an a et. Rent something out.
Co ider funds from savings, 401(k), i urance, and even friends. (Note: DO NOT cash in a 401(k).)
If you rent, see if labor might su titute for part or all of the amount.
Co ider a reverse mortgage, equity loan on your home or car, or signature loan from a credit union. Please do not co ider this unle bankruptcy is the only other option since in the long run an additional loan will just make matters worse.
As an a olutely final resort, co ider bankruptcy but not before seeking formal financial cou eling.
Research other mea of reducing your budget.
Rent/mortgage - You aren't getting very far without a roof over your head. If you're looking at long term financial distre you may have to co ider selling or relocating, but clearly, housing is an e ential.
Utilities - Housing also mea utilities. E ecially if there are youngsters, don't even think of eliminating gas or electric. Reduce usage as much as you can but i ure you pay gas, electric, and water. The phone s a different story along with cable. The former is optional in moderation and the latter is "Get rid of it NOW!" until better times.
Child su ort - Unle jail is an option, child su ort is not. Plan to pay it.
Car Payment - If you need the car for a job, it is an e ential. If there is an alternate tra ortation, the car and i urance may have to be a non-survivor.
Secured Debts - Secured debts are those a igned to a collateral (house, car, furniture, etc.). Creditors can often live with a late or mi ing payment or even two. Contact the creditor and explain the circumstance, but definitely do not just ignore your creditor. Yes, your credit may be hurt, but we are dealing with an emergency and wounds will occur. If the disaster is long term you may have to co ider surrendering the property.
U aid Taxes - Negotiate payments but don't ignore this one. Co ider it child su ort to your government.
Food - Just because food is a priority, it doe 't mean filet mignon. Common se e rules in this area.
U ecured Debt - U ecured debt are those loa without property attached: credit cards, department store loa , gas cards, medical bills, loa from friends. (Note: Student loa should be co idered as a required debt.) Failing to pay these will eventually be very painful with your credit and good name but are probably the least devastating for the short term.
In Between Items - Medical i urance, children's "needs", and other debts unique to your circumstance will require a value judgment. How long is the emergency.. what can you live without... how bad is the situation... can the debts be delayed?
_______________________________________
The Proce
List all your bills and their expected amounts. Sequence them according to their priority to be paid 1, 2, 3, etc. begi ing with your mortgage as #1. At one of the priority numbers you will determine where "Must Pay" ends and "Should Pay" probably starts. Draw a horizontal line here and continue down the list. You might now reach a point of ending "Should Pay" items and find you are in an area of "Would Like To Pay". Draw another horizontal line.
Start paying priorities 1, 2, 3, ... until you're out of money or finished with "Must Pay". Determine your deficit to "Must pay" items. If you still have money, continue with "Should Pay". If you run out of money, place their amounts on your deficit list. If there is still money left, go onto "Would Like To Pay" until you run out. If there is no money or you run out, ignore the remaining list since they can be taken care of in better times.
Using your deficit list, contact your creditors. Many will be willing to work with you to skip a payment, lower interest, pay interest only for a month or two, or offer a number of other optio . Maybe they won't, but it won't hurt to ask. (Used judiciously, "accidentally" mentioning the po ibility of bankruptcy, sometimes yields major power.) Adjust your deficit list accordingly.
Optionally talk to a debt cou elor but not a debt co olidator. At the very least, try to share your list with someone you trust. Often times another set of eyes can see something more objectively or have ideas you never co idered.
Determine how to make up the difference on your deficit list with some of the following ideas:
Reduce expe es by a lying many of the frugal concepts at this and other sites. Take on a second job for the short term.
Have a garage sale. Sell an a et. Rent something out.
Co ider funds from savings, 401(k), i urance, and even friends. (Note: DO NOT cash in a 401(k).)
If you rent, see if labor might su titute for part or all of the amount.
Co ider a reverse mortgage, equity loan on your home or car, or signature loan from a credit union. Please do not co ider this unle bankruptcy is the only other option since in the long run an additional loan will just make matters worse.
As an a olutely final resort, co ider bankruptcy but not before seeking formal financial cou eling.
Research other mea of reducing your budget.
