Trouble Covering Expenses
If you’re struggling to cover your bills, you’re not alone. Most Americans, especially those in the middle-class income bracket, get stressed and feel overwhelmed when facing difficulty in making their bills.
Common causes of financial trouble
Financial trouble will often begin with difficulty covering existing expenses. The financial struggle has often been caused by some life-changing event, such as losing a job, going through a divorce, or getting into an accident causing a disabling injury.
This section will cover some ways to prioritize your debt while cutting costs. We also show you how to integrate some frugality into your life while having some fun doing so.
Finally, this section includes articles that will help you stay positive and motivated while caring for your physical and emotional wellbeing as you move through financial challenges.
Ways To Be Frugal and Cut Debt
Ways to be frugal and enjoy economic stability
- Cook at home more often.
- Cancel unnecessary internet subscriptions.
- Downsize your home or get a roommate to share rent and living expenses.
- Get rid of interest-bearing debt.
- Take public transportation.
- Get a less expensive cell phone plan.
- Shop at discount and second-hand stores.
- See if you qualify for food stamps.
- Consider enrolling in a discount prescription drug plan: (Some plans offer as much as 80% off retail prices without premiums or co-pays.
How to Prioritize Your Debt
It’s not always obvious knowing where to start when prioritizing which bills you should treat as a priority debt, especially if you have multiple credit cards and creditors.
Our articles will show you the many ways you can prioritize between different forms of debt and why:
- Start paying the credit cards with the highest interest rate first. Interest adds up quickly, and eliminating high-interest debts first will save you money in both the long and short term.
- Consider paying only the minimum payments due.
- If paying the minimum on all your credit cards is not an option, focus on paying those debts with the highest interest rate first.
- Make extra payments when you can. If you can borrow small amounts from friends and family, try to put that money towards your debt payments.
Negotiate Better Terms with Your Creditors
You may be surprised to learn that creditors are often willing to work with you to make your debt more manageable rather than have you default on your obligations and be forced into bankruptcy. Lenders rarely recover their losses if you choose the bankruptcy option.
Negotiating with your creditors can be stressful
Negotiating with creditors does not have to be an intimidating experience. In fact, many lenders offer hardship programs for people who, in good faith, are committed to repaying their debt.
Here are some helpful tips when approaching your lender:
- Be honest and upfront about your financial situation.
- Show willingness to pay your debt.
- Offer a reasonable repayment plan.
- Ask about hardship programs.
- Be sure to make and keep a written record of your conversations.
Rebuilding and then maintaining your financial health takes time and effort. Keep disciplined in sticking to your budget.
Understanding the Psychological Impact of Debt
This section will also address the emotional impact of debt and how it can affect your wellbeing and the health of your relationship with your partner.
Unfortunately, debt and divorce often go hand in hand.
We explore the psychological effects of debt and offer suggestions for coping with these challenges from a place of personal strength.
Our financial section offers articles that will support you as you take on the emotional side of climbing out of debt.
Here are some tips you will learn:
- Understand your feelings. Recognize that it’s normal to feel stress, anxiety, or depression due to financial trouble.
- Don’t internalize your stress and fears. Reach out and seek emotional support from trusted friends and family.
- Practice self-care and self-compassion
- Ensure you’re eating well, exercising regularly, and getting enough sleep.
- Consider consulting with a mental health professional.
Finally, as you leave debt behind, you will want to establish new goals to help you reach and maintain financial stability as you safeguard against future economic downturns and unexpected expenses.
Here you will find articles showing how to keep yourself out of debt by building an emergency safety net.
Budgeting For Emergencies
The following tips will help you stay above water should you encounter an unexpected reduction in your income:
- Your emergency fund should cover at least three months of living expenses, but the exact amount depends on your circumstances.
- Start small. If you can’t save a lot right now, don’t worry. Even small contributions can add up over time.
- Your emergency fund should be easily accessible if you need the cash quickly. For example, suppose your car breaks down, preventing you from getting to your employment. In that case, you may need to find alternative transportation quickly.
- Remember, saving for an emergency takes time. Start slow, be consistent, and increase your contributions as your financial situation improves.
- Determining the right amount to save for an emergency fund can depend on various factors, including your monthly income, expenses, financial obligations, and lifestyle.
How to figure out how much you should be saving:
- Start by calculating your monthly expenses. This should include housing costs such as your mortgage, utility bills, groceries, transportation, health care, debt repayments, and other regular expenses.
- Remember to include non-essential but regular expenses like dining out, subscriptions, and personal care.
- If your income is stable and predictable, you might need a smaller emergency fund than someone with a variable income. For instance, freelancers, seasonal workers, or those who rely on commissions might want to have a larger emergency fund due to the potential volatility of their earnings.
Remember, starting small and gradually building up your fund is okay. Even a small emergency fund can provide a financial buffer, reducing the need to rely on credit cards or loans in a crisis. Regularly review and adjust the size of your emergency fund as your financial situation or comfort level changes.
The Credit Counseling Option – Exercise Caution
Credit counseling can be helpful if you’re having trouble paying your bills. Credit counseling agencies can assist you in creating a workable budget and, depending on your debt-to-income ratio, help you negotiate with your creditors for more manageable repayment terms.
