What to do if you're in real trouble
Alright, so you're looking at your bills, your income and the stack of overdue notices piling up and beginning to freak out. How can you pay for all of this?
They're going to take the house! They're going to shut off the power! You can't afford to feed yourselves this week...
There is always a way. Here are some tips for making it through.
1. Prioritise your bills
There's no point having your internet paid up if your landlord is evicting you, or your pay TV connected if the repo men are coming for your plasma. So prioritise your bills.2. Ring your creditors
- 1. Keep a roof over your head. Mortgage or rent comes first, you need somewhere to live and it's vital you pay this first.
- You need something to eat. Pay for food next. It doesn't have to be fancy gourmet, toast and beans, can of soup, cereal for breakfast, homebrand, all options if you are on the bones of your bum.
- Utilities, keep the power on, the water flowing and your gas (if you've got it, connected).
- Credit cards and personal loans. Keep paying that debt down.
- Insurance, if you've got it, can save you a lot of money if you get in more trouble (car accident, lose your job, a death in the family) so if you've got it, pay it.
- Mobile phone, home phone, internet. I would pay my mobile before the home phone and the internet last. A mobile you can take anywhere and generally most mobiles already have the internet.
- And then the rest.
Tell them that you're in trouble and ask for a payment plan. They want their money and are likely to help you out in terms of a payment plan if you just call. It may be embarrassing but sometimes we have to swallow our pride. If you've received several notices and can pay a smaller amount they may just accept that.
3. Cut all unnecessary expenses
Do you need that daily coffee or can you make it at home for cheaper? How about lunch out every week? Do your children need a new toy every pay day? Can you buy cheaper brands or buy in bulk? If you're in real financial trouble you may need to slim down your budget, and this means sacrifices.
Can you sell your brand new car and buy a cheaper one to cancel out your car loan? Can you take a cheaper rental? How about your power bills, anything you can switch off to save?
5. Think before you declare bankruptcy
Bankruptcy has very serious consequences and is not to be taken lightly, ensure you consult with a professional before making any decisions. Some may be able to liaise with your creditors to make a payment plan rather then going down the bankruptcy path.
6. Don't involve your children in adult issues
By all means, tell your children you can't buy something because you can't afford it or can't go somewhere because it's too expensive. But don't tell your children you're going to lose the house or you're worried about legal action because of the debt. These are adult issues and are not appropriate for children.
7. Pay your debts before you pay yourself
Don't buy that new top, new game, new book, before you pay your bills. It might be common sense but when you're stressed about money sometimes spending a little on yourself can make you feel good. Take the satisfaction from paying off your debts.
8. Make a financial plan, and stick to it
Sit down with your partner (if you have one) and be realistic. Don't make huge big plans if you won't be able to abide by them. That's not doing anyone any favours.
9. Seek help from government agencies and charities
Can centrelink or family assistance help? It may be worth asking. And if they say no then you've lost nothing. If you're struggling so bad you can't put food on the table, swallow your pride and reach out. The Smith Family, Salvation Army, soup kitchens, that is what they're there for.
10. Find any way you can to save money
Be thrifty! Make your own cleaning products, cook from scratch, make Christmas and birthday presents, have cheap or free family outings like take your lunch to a park for a picnic. This bubhub thread can help you slash your food costs.
Finally, good luck, you can do this!