What can you do when you can’t afford to pay your monthly bills?

If you bleed red and live in America, you likely stretch your income exceptionally thin. More and more of those hard-earned dollars seemingly fly out the door to pay monthly bills and cover subscription services, not to mention to repay debts. Bills and debt balances never seem to decrease, so your top financial goals remain out of reach. Take heart. You have options.

You may even feel a tipping point coming just around the corner. One doctor’s visit, one missed payment, or a single unexpected car repair would certainly send your finances into a downward spiral. Take heart. When you feel unable to pay your bills, you still have options.

When you feel overwhelmed by your regular bills, your options include cutting down on other expenses, taking on a side hustle or part-time job temporarily to earn extra income, turning to family, a nonprofit, or a government agency for support, or doing a combination of all three.

Do these steps now to turn the tide and get back on track with your finances.

Maybe your creditors haven’t started calling quite yet, but you find yourself uncertain about who you can afford to pay and who doesn’t get paid this month. Of course, you hope to avoid that scenario altogether in the future. If this sounds all too familiar, take heart. You are not alone, and you still might turn things around with some of the tips and suggestions that follow.

First, though, please know that everything will be okay. It can sound cliché when going through difficulties, and it certainly doesn’t feel like it’s going to be okay. But it will be. So many households struggle with bills, regardless of the bigger economic picture. Know that there are plenty of resources available to get you through as well as plenty of community members to accompany and support you along the way.

When a creditor calls and asks or even demands payment, don’t be afraid to say “no” if you can’t afford it. If they threaten you with arrest, take courage in the fact that we haven’t had debtors’ prison in the US since the late 1800s. In fact, such threats most likely violate the Fair Debt Collections Practices Act, which could result in fines for the debt collector. If a collector threatens to harm your credit rating, know that credit ratings aren’t forever. They can be repaired, and rather quickly at that.

Don’t get scared into something that may make your situation worse by such abusive collection tactics. Don’t be fearful of what the future holds. Rather, take the time to give yourself encouragement. After all, you want to take the steps necessary to regain control of your finances. That’s a huge start, and with determination and perseverance, you’ll succeed. You will likely even come out in a much healthier financial position than you were in before your current financial struggles started.

Second, you must prioritize where your money goes each month, and you’ll want to set those priorities now. Don’t wait until tomorrow or even this evening. Keeping yourself fed, having a roof over your head, ensuring the power stays on, and having the ability to communicate with others should occupy the top spots on your financial priorities list.

Once you have your priorities in place, keep them front and center while you work through your options for taking care of your bills and debts.

The Origins of Personal Finance Challenges in America

Many, if not most, American workers believe that if they just earned more money, all their financial troubles would disappear. After all, when bills equal income, increasing your income seems like a logical solution.

Others see financial challenges as resulting from a broken or, worst, malicious economic system. While there is certainly much truth in the idea that we have had some terrible racial, ethnic, and class discrimination in our country, believing solely in this source of financial problems can easily lead to a victimized mentality that disempowers rather than empowers the individual and the household.

Finally, others see financial problems as the result of poor personal choices. Some of us have made far more poor financial choices than others. For example, I often share in my workshops how I maxed out my first credit card at age 21 or 22 to the tune of $2,000 in less than 36 hours. I dealt and lived with credit card debt throughout my entire 20s, feeling even now the sting of a lost decade of financial possibilities.

There is no shame in dealing with financial problems resulting from any of these sources. If your income does not match your qualifications, you can take comfort in knowing that such is the case for most employees. Keep looking for opportunities to increase your income while also improving your life satisfaction.

If the system tends to place barriers to your own financial success, then you can take comfort in your struggle alongside thousands and even millions of others working to break down those barriers.

And if you have made poor financial decisions that even seem to wreck your entire financial future, few Americans could not relate.

The reality is, regardless of the reason you find yourself facing financial difficulties, there is always hope: hope in your community, hope in your family and neighbors, and hope in your own abilities to implement a process to turn your finances around.

Your Options When You Can’t Afford Your Bills

Despite your worst fears and all the talking heads you can read about, listen to, or watch online, you have just four options for resolving your financial challenges. Instead of feeling overwhelmed by dozens or even hundreds of possible choices, you can gather confidence knowing that you can grasp and implement one or, more often, a combination of several of just four options.

Earn More Money

Earning additional income can certainly help in most personal and household finance struggles, at least temporarily. I would certainly never discourage you from earning more money if it helps you achieve your priorities.

Unfortunately, too many households assume that just because their bills equal their income, they have an income problem. In most cases, such households have allowed their bills (spending) to grow and build to the point that they reach or even surpass their income’s ability to pay for them.

Examples include getting into a much more expensive home or apartment than the household income can afford or purchasing a new (or even used) vehicle whose monthly loan payment and related expenses (insurance, maintenance, fuel) far exceed the reasonable 10% or 15% levels compared to your income. Signing up for multiple subscription services, from telephone and streaming media to monthly wine delivery and pet food and toy programs can quickly lead to maxing out your income.

These are not income problems. They result from confusing our spending priorities.

Spend Less Money

Prioritizing your expenses and then adjusting your purchases and spending accordingly usually have the greatest impact when addressing household financial problems. This will often involve cutting expenses by canceling subscriptions or other services, making this option also the most painful solution.

Some people think it equates to saying “no” and therefore becomes too restrictive. Instead, you should look at it not as telling yourself “no” for items low on your priorities list but “yes” for items at the top of your list.

If you must cut expenses in one area, make sure you consider how it helps you redirect that money to areas of more importance to you.

One of the most helpful ways to do this involves setting up more than one savings or checking account and automatically and regularly transferring set amounts to use for your top priorities.

Borrow Money

When money gets tight, the easiest response can involve borrowing money to pay the bills. This can take the form of using credit cards to make purchases, siphoning equity from your home through a line of credit, or taking out a loan to cover the current budget shortfall.

Regardless, the easiest solution is rarely the best, and this case is no different. Using debt to address short-term cash flow problems usually ends up simply delaying the need to earn more or spend less. In fact, it more often than not makes matters worse by adding interest on the loan as an additional regular payment to make.

Look for Outside Help

Turning to an outside party for help can feel both frustrating and embarrassing, regardless of the reason. It should not be that way, though. Millions of American households turn each year to nonprofit credit counseling agencies, bankers, bankruptcy attorneys, CPAs, and financial educators and counselors for guidance and for programs to help them get through their current difficulties.

Additionally, city, county, state, and federal governments offer assistance with everything from food and housing to cash assistance and health insurance for qualifying households.

Finally, the closest and often most difficult assistance can involve your own families and friends. However, those who know you best can often be the most reluctant to step in to help, often focusing on your past mistakes than on the solutions. If you choose to pursue this route, keep in mind that you are asking for help to fix a problem. You should never feel subjected to belittling or disparaging remarks or behavior.

Preventing Unaffordable Bills in the Future

Moving forward, keep the following tips in mind to avoid running into similar problems.

Keep Your Income in Mind

Hold a regular brainstorming session to consider additional or alternative sources of income. Perhaps you can take on a part-time seasonal job that you enjoy? Or maybe you have a hobby or passion you could turn into an income source by creating a blog or podcast. Find something you love, have a skill in, and that fits into your time and your life.

Prioritize Where Your Money Goes 

Whether in writing or in your head, assign every purchase and bill a priority. You should know where it fits within your spending plan, and how it compares, for example, to paying rent or paying your cell phone bill.

Along the same lines, avoid setting up subscription services that are at or near the very top of your priorities list. Obligating small amounts of your monthly income to multiple subscriptions can quickly eat up all your disposable income.

Similarly, when shopping for a vehicle, home, or other large purchase, do not shop based on the potential monthly payment. Keep the total purchase price in mind. All competent sales and finance people can tailor a monthly payment to your income while still keeping their final price as high as possible.

Calendar Your Bills

Set up your bills and expenses based on a financial calendar. Make sure bills are set up to come out of your account after your paydays. Write down on a calendar (paper or electronic) what needs to get paid, to whom, and how much. Seeing your bills can open your eyes, so to speak, as to whether you have too many financial obligations.

Revisit

Set a reminder on your phone, computer, or calendar to review and reassess your finances every three to six months, especially following financial crises. Find answers to questions such as:

• Am I saving enough to replace an appliance that is getting old?

• Can I afford to save more for my upcoming vacation?

• How much more can I add to my retirement funds?

• Do I have time available to earn extra income for priorities 1, 2, and 3?

Facing the front side of a financial crisis can feel overwhelming. Keep up your hope, make some phone calls, send some emails, do some research, put in the required effort, and soon you’ll find yourself on the other side looking back, feeling stronger, wiser, and even more financially stable and secure than ever.