How to Pay Your Bills When You’re Broke

how to pay bills

When the money in your bank account just won’t go far enough, it often comes with bouts of panic, stress, and sleepless nights. None of these reactions help you learn how to pay bills when you’re broke.

Maybe you’re having a difficult time finding employment, had an unexpected expense, or simply lost control of your finances. This happens to all of us at one time or another, but bills still need to be paid.

If you’re down on your luck, these five steps will help you minimize the fallout from non-payment.

What to do when you can’t pay your bills

1. Take account of your situation

Take a look at the cold, hard facts. What caused you to be in this situation in the first place? Maybe it’s human error and can be easily fixed. Perhaps it was a financial emergency that you couldn’t have planned for.

Log into your bank account and perform a quick audit of all your transactions, deposits, and expenses. If you have trouble paying your bills, you’re likely overspending or not earning enough.

If overspending is the problem, create a budget and start reining in your spending. Track each of your transactions and vow to cut back.

If you’ve already trimmed your spending as much as possible, you might be struggling with a lack of income. It may be time for you to move to a cheaper place, find a better-paying job, or take on additional work on the weekends.

Whatever the case, take account of the situation and pinpoint the source of the problem. Figure out why you can’t pay your bills and find solutions to remedy it — this is the only way you’ll be able to move forward successfully.

2. Understand the consequences

The longer you wait to pay your bills, the more dire the situation will become.

Any past due bill will negatively affect your credit report. It will show up as a derogatory mark on your credit history and cause your credit score to decrease. The damage worsens the longer the bill remains unpaid; this is why it’s important to pay any amount of money towards your bills that you can, even if it’s not the entire amount.

Not paying bills on time also means incurring late fees, past due charges, and additional interest. This can increase the amount you owe until it snowballs out of control.

If the bill is delinquent for long enough, creditors can sue you for unpaid credit card accounts, medical bills, and other personal loans. Any assets that are associated with debts, such as a mortgage or car loan, can be repossessed by the bank to cover the remaining amount.

For these reasons, it’s vital you take action as soon as possible to reduce the overall impact of not being able to pay your bills on time.

3. Organize bills based on importance

Make a list of your bills, starting with the essentials. Making sure you have food to eat, a roof over your head, and clothes to keep you warm are vital parts of survival, so start with those necessary expenses first.

Keep a tally of each bill’s balance and the number of days the bill is overdue. Write out any fees you’ve incurred so far or interest you expect to pay. Go down the list and get the contact information for each company so you can ask about payment options.

Some utility companies offer discounts or subsidies for low-income customers. You may be able to take advantage of this or other federal assistance programs to help get back on track.

4. Contact the companies you owe

Creditors are not as scary as you may imagine. They want to help you so you can continue paying your bills.

Call up each establishment and plead your case. If nothing else, they may be able to grant you an extension to pay your bills at a later date, giving you more time to earn the necessary money.

Once you come to a modified payment agreement with a company, make sure you get the new terms in writing. This will ensure that everyone is on the same page and that there are no misunderstandings in the future.

5. Consider more drastic options

Not being able to pay your bills is a scary situation and may take some out-of-the-box thinking to get back on track.

Are there income or housing benefits you could apply for? What assistance programs can you check out? Check out Benefits.gov to review federal programs that could help you.

Friends and family may be able to help with childcare so you can take on an extra job. It doesn’t hurt to ask for help — everyone needs it at one time or another.

How to pay bills when you’re broke

Not having enough money to pay bills is something most people have faced at one time or another. The important thing is not to let it get any worse and to deal with the situation head-on.

Once you get back on top of things, create a plan to avoid this same mistake in the future. You can combat emergencies and other unknowns by saving an emergency fund — contributing just $10 per week will add up.

Good financial habits start small and develop over time. Take a deep breath, be proactive, and you can learn how to pay bills, even when you’re broke.

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LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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