Maybe you are in a situation where your finances are starting to get out of control. Bills are starting to pile up. You have got all sorts of different debt such as student loans, credit card debt, a house payment.
Not only do you not have savings in your account or an emergency fund, heck, you don’t even know what to do with the money you do have because of the precarious state your finances are in.
And all of the past due bills you have unpaid. You are at a point where you want to cry everytime you open the bills because you don’t even know if you have money for the bills. Or you can’t even face the bills, so they go unopened into a drawer. To be dealt with later. Okay, real talk, this is a scary situation to be in. Hands down.
First of all, take a deep breath. As you take this deep breath promise yourself that you will take the first step towards getting out of this awful situation you find yourself in. Now you might be at the point where you don’t know where to start because there is so much going on.
What to Do When Your Finances are a Disaster
Step 1: Determine Actual State of Past-Due Bills
So, the first thing you need to do is figure out how far behind you actually are. Crack open all of your past-due bills. Yes, it will be painful. You need to see how much you owe. Write down in some format what that number is.
Step 2: Account for All of Expenses You Have
Are you aware of all of the costs of everything you need to pay for? Now, you probably have bigger expenses like rent and utilities. But what about smaller expenses?
Did you forget you have a Netflix account that you are automatically paying for each month? Subscription services are great. But when they are paid automatically, it can be really easy to forget about them over time. And the money can add up.
Step 3: Set up a Budget
Now that you have a clear picture of what you owe, and you know what your expenses are, it is time to make a budget. Either look at your paper copy or bills or the electronic version.
Go nitty-gritty. Look at the little things. Your Netflix account. Or your Starbucks trips. Also account for the oddball amounts, like birthdays or holidays. There are different ways to do this.
The thing about budgeting is that you have to make your money work for you. You have to have enough money that will cover all of your expenses. So sometimes you have to cut back on what you are spending.
And if you are past due, then it is going to feel impossible to catch up. It’s doable, but you will need to make some major adjustments to your spending by cutting things out.
Step 3a. Figure Out What Can Be Cut From Budget
Netflix subscription? Let it go. Starbucks trips? Let it go. Any other subscriptions? Let them go. Now, it doesn’t mean you will let these things go forever. But let them go for now.
So that you can start digging yourself out of the metaphorical hole you find yourself in. It might feel more painful because of what you are giving up temporarily. But it will only be for a season and then you will be caught up. And once caught up, you will have more expandable income.
Step 4. Deadlines
You need to know the deadlines for everything that you have. There are different ways this could be done. Take a calendar and write down the deadlines so you can see it. Because the visual aspect can be really helpful.
Write down the deadlines of anything being taken out of your account automatically. If you haven’t set up your bills with autopay, this is a great way for your bills to be paid without you having to think about it or manually pay the bill. Just make sure there is money in your account.
Know it is going to take a lot of effort and time. Slowly but surely you will be able to catch up. Your finances will no longer be a disaster. Don’t give up. You got this.