Bills are piling up and you are short of cash to meet all expenses. You receive letters from financial institutions and utility companies as well as threatening calls. This is a warning sign that it is high time to put your finances in order and start to prioritize. There are expenses you cannot cut off completely such as insurance, groceries, and shelter and bills you can delay paying or you can look for cheaper alternatives.
Most Important – Basics
Obviously, you cannot go without basic necessities such as food, shelter, and utilities and there are bills you cannot delay paying.
We buy groceries on a weekly and even daily basis and while there are ways to save on groceries, you cannot live without food. A balanced and diversified menu is essential for your health. Whenever you can, use grocery store coupons.
Shelter means security for your children, family, and belongings. Whether paying rent or mortgage, you need a certain sum of money on a monthly basis. Otherwise you risk losing your home or your landlord will take action against you.
Transportation is also an important consideration. We use public transport or drive to work, for grocery shopping, emergencies, and so on. There are unexpected expenses such as car repairs as well.
Home, health, and auto insurance are necessary expenses. Home insurance covers your property and belongings while health insurance pays for hospital accommodation, treatment at the ER, medical expenses, and more.
While you cannot deprive your children of shelter and food, there are expenses and services that are less important for the health, safety, and wellbeing of your family. Less important expenses are those that bring comfort and enjoyment but you can cancel subscriptions such as gym memberships and magazine subscriptions if need be. The same goes for internet, cable TV, and cell phone plans.
Obviously, it is important to have a phone in case of emergency. What you can do is cancel your cell phone plan and keep the landline.
Unless you go to the gym for health-related reasons, look for ways to reduce membership costs. One way to do this is to cancel your membership and shop for deals during the slow season. Another way to save money on membership is to go at the end of the month and check for deals and promos.
There are ways to reduce your cable TV bill and free up cash to pay for necessities and emergencies. You can lower your bill by paring down your subscription plan. Another option is to cancel your plan and comparison shop to find a low-priced plan. Downsize and bargain.
To lower your internet bill, contact your provider and ask for lower-priced packages. Check what competing providers have on offer for new customers and ask your neighbors, colleagues, and friends about the types of deals they are getting. One way to negotiate a discount with your current provider is to tell them that you are not satisfied with the level of service.
Credit Card Bills
Credit card and loan balances contribute to piling debt. If money runs tight, it is time to look at your income and prioritize bills. Your income should cover basic necessities and debt payments at the very least. If you have multiple debts, you may want to prioritize and pay high interest balances first. If you have cash advances or payday loans that go with extremely high rates, think of ways to repay these debts first.
The most important step is to decide what to keep and what you can do without until you repay your debts, find a well-paid employment, and get back on your feet. Compiling a list of your expenses helps create a realistic budget. This is a good way to find out where your money is going. List your basic expenses first to see how much you are left with for other expenses. Then you can make a decision on what you can do without, whether it is cable TV, gym, or magazine subscriptions.
What to Do Next
The first step is to decide what bills to put off and how to scale down your expenses. The next steps are to pay outstanding balances and find a second job, additional source of income, or a high-paid position. If you have high-interest cards, shop around for a balance transfer card with a long introductory period and zero interest rate. You may want to open a savings, money-market, or checking account and use it as an emergency fund to cover the basics and pay off existing debts.
There are ways to create a realistic budget and stick to it to be able to meet all expenses, both basics and expenses such as cable TV and gym memberships. It is important to prioritize necessities, activities, and expenses to avoid excessive debt and live within your means. Talk to all family members and discuss different ways in which everyone can help lower your household bills. This is also a great way to teach your children a lesson to learn how to be financially responsible.