Since I work on commission, I have a lot of months where my checks are barely enough for us to get by.
This is especially true around the holidays when sales are hard to come by.
At one point, times like this would really set us back. We would be late on bills, requiring us to pay the late fees on top of what we already owed and we were always trying to figure out whether to pay a bill or buy food.
Through this, I learned it is possible to make your checks stretch even when your income normally wouldn’t be enough to cover your debt.
1. First, talk to your creditors – The hardest part for us was the fact our bills would always be due at the exact same time. And, because of this, some would have to be paid later in the month, when they were late. Then, I got smart and called up the companies and found that most gave me an option to change the due dates on my bills. I was able to split them up where half was due around the first part of the month while the others were due at the end of the month.
2. If you have a heating bill, set up a budget plan – A couple of years ago, we thought we were finally on our feet when we were surprised with a $400 heating bill (the apartment we were renting was not energy efficient). That was followed by a $350 heating bill. We ended up having to use our tax return to pay off the electric/gas company and I set up a budget plan with them. It means I pay a bit more in the summer months but I’m not surprised by a large bill in the wintertime.
3. If you can’t pay the bill, you may not have to – OK, you’re going to have to. But, what I mean is, some companies like student loan companies and mortgage companies will give you the option to defer payment if you are suffering temporary financial difficulties. Whenever money is tight for me, for example, I put my student loan in forbearance for a few months; freeing up an extra $130 for other costs. Of course, you probably will only want to do this as a last resort since you still accrue interest on the unpaid amount.
4. Keep a savings account – When you have the money, put some money aside. If that’s rare, then save up your spare change and put that in your savings instead. That money is then available to you when you’ve exhausted all other means and need an extra $100 or so. And, in the meantime, it’s collecting interest.
One suggestion with this; set up your savings account with an online bank like ING. There are two advantages to this. First, the money gets a much higher interest rate than your local bank will. And, the fact it takes roughly 3 business days to get the money into your checking account makes it harder for you to take the money out on a whim rather than when you need to.
5. Reduce what you can – Look, I know that high-speed Internet connection is great. But, if you’re paying $30 a month for it and can’t afford that, then you may have to settle for a cheaper plan for a while. And, do you really need those premium movie channels? Book clubs might save you money, but not if you’re constantly paying for unwanted books. If you can reduce or eliminate a bill, you should do it.
6. When all else fails, time to bring in a second income – I didn’t do it this past year, but one of the things I normally will do around the holidays is taking a second job. It’s not ideal. But, that extra $75-100 a week really goes a long way towards keeping us from drowning in unpaid debt.