Currently, almost thirty percent of Americans live from paycheck to paycheck. As such, it is not uncommon to come across cases where people fall behind on their bills. The consequences of being behind on bills, even by a single month, can be dire.

One of the results of falling behind on bills is that creditors begin to harass you, demanding you pay what you owe them. But how can you avoid such unfortunate circumstances? What are some of the ways to avoid falling behind on bills? The following processes have been tried and tested, and will definitely help when you are unsure of the next step.

Write Down Everyone You Owe

Make a list of each and every person you owe money, the amount you owe them and by how much  you are behind from clearing the debt. Also, indicate the minimum amount you are willing to pay every month until the debt is fully paid. This plan will clear up things for you and help you plan for the future.

Work with a Budget

A budget is the cornerstone of a secure financial picture. You should not consider budgets as restrictive. Rather, you need to realize that a budget will enable you to keep track on your bills while giving you the freedom to spend your money wisely. Any sound financial goal needs a budget.

Remember to list all your monthly expenses and the dates they are due. This will create a clear picture of what to pay and when to pay it.

Track Your Spending

The essence of creating a budget is to follow it. Keep track of your daily spending and ensure that they are within your budget – be it groceries, entertainment, or eating out.

Reduce Your Expenses

When on a budget, you will need to get rid of unnecessary expenditure. This comes in handy especially when you are behind on your bills. For instance, you can forego the cable or gym membership for a while until you can afford them again. There are companies that can suspend their services for some time and resume when you pay. Therefore, you will not necessarily need to cut these services permanently, just put them on hiatus.

Create a Get-Caught-Up Plan

Such plans vary with different individual situations. Sum all the money collected from cutting expenses and budgeting and keep them in a different account. You can then use this money to get caught up on bills.

There are those who prefer settling smaller bills before embarking on the larger overdue bills, because it may take more time to clear them. Another excellent plan is to pay off high interest loans such as credit cards early before working on lower interest loans such as mortgages and car title loans.

When it comes to larger bills, it is advisable to get in touch with your creditors early. Most of them will be happy to help you come up with a payment plan and assist you to get caught up. They should be understanding and let you explain how much you can afford to pay every month to offset the debt. Even utility companies will be glad to help you formulate a payment plan if they are assured of getting their money back.

After you agree on an affordable amount, stick to your side of the bargain and send the amount every month until you are caught up.

Pay the Most Urgent Bills First

Problems can arise with certain companies that have difficult payment terms or refuse to work with your plans. If you encounter such, it is advisable to pay what you owe them first. This will save you from a lot of stress and protect your credit from threatening collectors.

Diversify Your Income

The secret of wealth creation and living a debt-free life is having more than one source of income. This idea should be taken up by anyone who wishes to get caught up on their bills. In some cases, cutting expenses or budgeting may not be sufficient enough to provide extra money to offset your bills, forcing you to quickly think of a ‘side hustle’.

Here are some ideas to earn that extra cash:

  • Register with Uber and turn your car into a taxi. Once you sign up, you will receive some bonus, and can work with them in your free time.
  • Request to work overtime in your current job.
  • There are numerous opportunities online that you can use to earn some money. You can register as a virtual assistant or perform customer service.
  • You can decide to offer services such as lawn maintenance, pet walking or babysitting.

For a successful start-up, you need to list your interests and talents, and then write down the businesses in line with the interests. Start small with the aim of growing with time.

Never Give Up

Offsetting your bills may take more time than expected, but you will be delighted at the end. Do not despair when unexpected expenses come up or you receive obstacles that prevent you from keeping up with your plan.

Once you offset your balances, remember to formulate strong financial goals with a view to achieving financial independence.