Linda @ The Cents of Money
When you experience times when you can barely scrape by and your bills go unpaid, things can look quite dire. You may earn $500K but live a high life or lose your job. Recognizing the reality, “I’m broke” is the first step. Many people have faced financial struggles. You’ll need to assess your financial situation and not panic.
You and your family may not know where to start, but you face mounting bills and fear of eviction. You may feel alone and frazzled, but it is not uncommon for people to fall into financial hardship, and there is no shame in being there. It can happen suddenly from losing your job, high medical bills, student property loss, or marital problems.
1. Review Your Budget
To assess your current budget, you need to review your income sources compared to your expenses, separating your living costs, like shelter, utilities, food, medical, debt levels, and transportation, from discretionary spending that you can put on hold. Review your spending for the last couple of months. You need to know what your costs are down to spending on gas and cigarettes. There are strategies you can use for some of your largest and most essential expenses.
2. Prioritize Your Bills First
If you are experiencing financial hardship, contact those who control the most essential services, especially shelter, if eviction is possible. Identify the bills you owe to others, especially your landlord (or bank if you have a mortgage), utility providers, and any lenders, including credit card issuers. Look at the amounts, organize the dates due, and have a previous track record of paying your bills. You want to get some breathing room from those you owe to pay your debts.
3. Dealing With Creditors
If you always pay your bills promptly, creditors may be more understanding. Although you can call them directly, you should write a hardship letter to each of your creditors. Make it clear to your creditor that you will pay your debt, but convey that you cannot pay the debt due and explain your hardship. You’ll get a feel for the most lenient and who will immediately shut off your service. Your priorities must be housing, food, water, electricity and heat.
Bills related to credit cards, medical bills, and entertainment come after basic services. You need financial counseling to bring this high-cost debt to zero if you carry large credit card balances. Review and reduce your subscriptions, especially streaming; go to free streamings with ads and services you don’t use or need.
4. Get Financial Assistance
Depending on your circumstances and qualifications, you can apply for free government money to help you through financial hardships. Most government assistance programs are federally funded but run by the states.
- Homeownership (HUD
- Rental Assistance Emergency Rental Assistance (ERA)
- Home Energy Services (LIHEAP)
- Food and Nutrition Supplemental Nutrition Assistance Program (SNAP)
5. Spend Less Than Your Means
Unless you are already at the bare bones, you probably can cut out essential expenses. Review and reduce subscriptions you don’t need and convert to free streaming with ads. Some of the easier things you can reduce are eating out, ordering in, and cooking meals more efficiently. Use a shopping list, and buy more fruits, vegetables, chili, rice, beans, pasta, ramen noodles, and eggs. Be mindful not to overbuy food that can spoil; some canned items may be cheaper. If you did, freeze some of your vegetable scraps and use them for stock in the future.
6. Develop New Spending Habits
Your financial problems may point you towards developing new spending habits for the long term. Avoid impulse shopping. Pay your bills ahead of going shopping. Be mindful about buying things you don’t need, and shop for bargains, but know the real prices to recognize when prices are low. Visit thrift shops for gently used clothing at reduced prices. Reuse and recycle before you buy new things. Most essential, don’t use credit cards if you can’t pay your card balances in full. You will never get out of that high-interest cost cycle if you pay the monthly minimum. Find a financial counselor to work with you on this enormous problem.
7. Increase Your Income
Depending on your work situation, ask for more hours. Consider things you can do to make more money in your neighborhood, like babysitting for kids, organizing closets, pet walking, pet sitting, or doing chores. If you live near colleges, you may want to see what college students throw out that may be of value to you or can be sold somewhere for cash. Alternatively, people in rich neighborhoods throw out a lot of reusable things. Find out if you can work as a substitute teacher or rent a room to Airbnb.
8. Knitting Sweaters For Use or Sale
This is more of an example and works for those who are handy. One woman on a popular forum said she buys old sweaters from thrift shops, unseams them, and uses the yarn to reknit new sweaters to sell. There are many online tutorials, and you can get a whole sweater’s worth of wool or silk yarn for $6-8 and have hours of entertainment and relaxation. She said, “If you find the unraveling relaxing, plenty of people will pay on Etsy for “upcycled” yarn. One sleeve bought would pay for the whole sweater.”
9. Use a Thermostat
Air conditioning and heating costs can be expensive. Save energy in the winter by setting the thermostat down to 68 degrees F and lower while you sleep or buy a space heater. During the summer, raise the thermostat and save on your cooling bills. Always turn off lights in your home you don’t need.
10. “Don’t Do Things Cheaply If You Can Do Without It”
One person on the forum said that during tight times, he would go without certain things he didn’t need for living rather than fix something cheaply and waste money. He could survive as long he had a roof over his head, adequate nutrition (avoiding treats or snacks), soap and toothpaste, and heat in the winter. He walked long distances rather than take a bus and didn’t buy any new clothes, the internet, books, games, or TV. Instead, he had an old radio for the news. He added, “I’m not suggesting this is a commendable or desirable way to live, nor am I saying this is a standard of living that you should accept as your lot in life if you’re poor. But if you’re struggling, doing without is sometimes the best option.”
11. Enjoy Free Or Cheap Activities
Find free ways to have fun. The library is your friend and is more than books. You can find heat when days are cold and air conditioning when it is sweltering. It may be a place to find information, recipes, books, movies, and clubs and use their computers and how-to videos. It may be hard to see your friends who go to movies and dinner, but see if you can catch up with them after the event for coffee or take long walks. Forget social media constantly reminding us of how others spend time and money. Use this time to satisfy you, and if it’s free, all the better. Living stingy has its benefits!
12. Help Others
One person shared that as you go through tough times, so are others. She said, “Help them whenever you possibly can. I can’t tell you how many times a friend, relative, or neighbor saved my butt when I needed a ride to the store or a few dollars to keep the lights on. Build up goodwill and karma.” People barter what they have for what they need. When helping others, be grateful that you can.
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