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.

About the Author

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Client Credit Report Authorization

You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).