(Disclaimer: It’s important to note that I am not a financial advisor or anyone in the financial sector. This information is provided as a suggestion on what to do if you’re finding yourself in a tough financial spot. It is not the be-all-end-all of suggestions. This is simply how I handle things when I find myself in dire financial straights. You may have a better way or you may develop a better way that better meets your needs.)
Oh, American Dream, where have you gone? The United States has gone from having the world’s largest middle class to having no middle class. Of course, according to the statistics, 50 percent of US households are considered middle class, according to PEW Research. That’s for 2021. I’m sure that has greatly changed in the last 2 to 3 years. However, in 2001, 54 percent of the US population was considered middle class. In 1971, a whopping 61 percent was middle class. However, those stats don’t account for the entire story. In 2024, it now takes a salary of 96,500 for an INDIVIDUAL to live comfortably. If you’re a family of four, you need to earn $300,000 per year. If you’re a couple, you need to earn a combined $235,000. The official definition of middle class is anyone earning between $30,000 and $90,000 per year, but if you notice, even $90,000 isn’t enough for a single person to live comfortably. Someone’s numbers are way off, and I tend to think it’s the guys calculating middle class. So, if you’re having trouble paying your bills, you can start to guess why. I mean, the average car payment today is between $600 and $800 a month. The average rent in the US is $1,372, but I know people who can’t find anything under $1,500 a month. My grocery bills as a single person are about $500 a month, and that doesn’t include any fancy foods, like you know, bread, milk and eggs. Forget about steak, ground beef or anything else in that category, but I digress. How do you pay your bills when you can’t pay your bills?
Paying Your Bills When You Can’t Afford Them
Hopefully, you had a heads-up or a major feeling about your ability to pay your upcoming bills because the first thing you need to do is prioritize from the most important to the least important bills. The problem arises when you’re caught off-guard. It’s when you look at your bills and realize – Oh, shit! My electric bill is due in two days or my rent is due in five! You need to see this coming, and preferably, you need to see it coming 30 days in advance. This is why I tell all freelancers and gig workers to understand completely how much they spend and what they are spending it on.
Do Not Do Auto Pay
If you can avoid using auto-pay, don’t use it. I have a couple of bills that DEMAND to be able to debit my account. One of those is my cell phone bill. That's just eye-rolling. A cell phone bill.... Of all the freaking things. I guess this is so they can make sure I overdraft on the regular. Just because they want it, doesn’t mean the money is there. So, there’s the first piece of real financial advice. Pay your bills manually. Don't let THEM be in control of when YOU pay your bills. Just because THEY want it on the 15th doesn't mean I want to pay it on the 15th. Maybe I get paid on the 10th and want to pay it then? Or maybe this is a weird month, and I got paid on the 16th instead of the 10th. I need to be able to pay my bills when I need to pay them.
The other thing that really grinds my gears is late fees and overdraft fees. If you don’t have your electric bill, you also don’t have your electric bill plus an overdraft fee or a late fee. I think fees like that should be illegal except in the most extreme cases. I mean, if you can prove someone just bought a $100,000 car and failed to pay their CC bill because of it, yeah, they deserve a late fee. Someone who literally can’t afford the bill also can’t afford any fees. Be GRATEFUL for the money they do pay you. The logic is baffling. Oh, yeah, I owe you $100, and since I didn’t have the money through no fault of my own, you now think I owe you $135. Uhhhhh….. No. The bill should be the bill. End of story. Get your greedy gimme gimme hands out of my wallet. I'm sick of it.
In fact, I have a good story for this one. I was going to catch up on a bill. They give the option of grabbing a payment plan for it. Okay. Cause I know I'm going to have some money on the 30th. So, they ask - When do you want to pay? The 2nd. I'll pay it sooner than that, but if things go sideways... How much are you paying? We'll say $50. Let's be cautious here. It'll probably be more. SET UP A PAYMENT PLAN FOR $200 a MONTH for THREE MONTHS! Uhhhh . . . $80 * 2 is $160. This is what they're owed. $50 a month IS roughly a 3 month catch-up. I also already paid them $50, so it's closer to $110. and they want $600!? Oh, and they want to autodraft it. Nah. Fuck that. You'll get it when you get it. You're being greedy and nasty. Go suck on something unpleasant.
Pay Your Rent or Mortgage First
People get in trouble because rent and mortgages are due on the first. The money for this doesn’t come in at the front of THIS month. It’s the last of last month. So, by the time it’s due, everything else has already been paid and oopse, where’s the rent money? This means that whoever paid everything else and not the rent. The rent needs to be first. If you’re really going broke, you need to prioritize the rent. You don’t need anything else if you don’t have a place to live. Skip the electric. Skip the gas. Skip the CCs. Get that rent. Then, once you have the rent, put it in a savings account. Get it out of your main account so you won’t be tempted to spend it.
If you’re already late on your rent, try and work with your landlord. When do you get paid next? When can they expect the rent? And here’s the thing, if you tell your landlord, I will have 50% of the rent on X date, and the other 50% two weeks later, pay it when you said you’re going to pay it. You need to be good to your word, or your word will never be trusted again, and you could find yourself in eviction court. I actually had to do this two months ago when 2.5 of my clients paid LATE. I mean really late. I expect the money by the 26th, no later than the 1st, but those deposits get started about 6 to 8 days prior. So, if I don’t see that message by the 20th or the 25th, I’m screwed, and it happened. It’s even more awesome when what your owed is 3 times your rent, and you still don’t have the rent! Needless to say, I had to send out some reminder emails, but by the time they got around to it, it was going to be the 7th. The last day to pay my rent is the 5th. So, I told the landlord. Hey, you will get your rent in full on the 7th. And I had that rent paid by 7:45 AM on the 7th. If you say it, do it. I wasn’t even charged a late fee.
Pay Your Car Payment
If you have a car, pay your car payment next. If shit goes sideways, it’s better to be living in your car than on the street. Plus, you may still need that car to get to and from work or do to your delivery job or gig work or whatever. Pay your car payment next, or as I’ve done in the past, stick it in that same savings account with your rent until it’s due.
Pay Any Tax Bills
If you’ve been freelancing or GIG working, you have installment agreements. Pay these next. Government agencies are the only (that I know of) entities that can literally take everything you own, including your house and car, in order to pay off tax debts. You want to keep these current. You could even argue that these could come before your house and car payments because the tax man will simply steal them anyway, but I tend to put it here because your landlord and the company holding your car note are usually faster than the tax man.
If You Work from Home, Pay Your Internet Bill
Once you’ve secured your housing for another 30 days, pay your Internet bill, especially if you need this to work.
Pay Your Cell Phone
For the same reason that you need to pay your Internet bill, you need to pay your cell phone. You may even choose to pay this before your Internet bill. I know freelancers who use their phones to write articles in a pinch. It can be done.
Pay Your Electric Bill
Next, pay your electric bill. It’s hard for electronics to operate with no electricity. Not to mention, you probably enjoy having a refrigerator and hot water, if you’ve got an electric hot water heater. Oh, and then there’s air conditioning, but if you’re this broke, you’re probably not running your A/C. The reason I put this here is because your electric company probably isn’t going to shut off your electricity if you’re 15 or 30 or even 45 days late. However, any later than that, and you need to start worrying about it. By the time you’re 30 days late on your utilities, you really need to take a hard look at your income and expenses, because you have to catch this stuff up, and you should really strive to get it all caught up within 30 to 45 days after your first missed payment, and if you can pay part of it, do that.
Pay Any Personal Loans
Pay any personal loans that you may have taken out during the big P, especially if you got them from the SBA. Being late on these means their going to try and take some or all of your business and business equipment. It also means that you won’t be eligible for anymore help from them in the future, if you happen to need it.
Pay Your Water Bill
If your water bill isn’t part of your rent or included in something else, pay that. There’s water at the grocery store you can buy in a pinch, but the water that’s coming out of your taps should still be cheaper.
Pay Your Gas Bill
Now, pay your gas bill. You might move this up next to the electricity if you have a gas hot water heater, but otherwise, it’s going to be near the end of the list, especially if it’s not winter. And if it is winter, there’s usually a moratorium from November/December to March. Basically, the gas company isn’t allowed to freeze you to death.
Pay Your CCs
If you have credit cards, pay those after you’ve paid everything else. These are unsecured. They can piss and moan and whine and cry all day long about you missing a payment, but in the great big grand poverty scheme of things, they’re not as important as everything else I just listed. They have very little recourse in collecting this money. They can ding your credit. They can send you to collections. Blah blah blah whine cry pout. If you’re broke and there’s no credit on them, they’re last.
Food
I assume you’ve been working through your bills and buying a little bit of food and essentials the whole way through. Are you out of things? I bet you are, but you can restock as soon as things are looking better and everything is caught up.
What About Insurance?
Insurance is one of those things that’s probably automatically withdrawn from your accounts. So, if you have car and house insurance, you’ll need to budget for those when they’re due. That’s something you’ll need to figure out for yourself. You may prioritize it right up there with your rent payment. How important is it to you? Do you have to have it because it’s tied into your house or car loans? No one can tell you what to do about your insurance products.
What about Subscriptions and Everything Else?
The only subscription or membership you may want to keep paying is your gym membership. Everything else you should have canceled the minute you realized you couldn’t afford your rent. All those little fees add up. It doesn’t matter if it’s $5, $15 or $50. How many of those do you have? What’s the combined cost? Would you be better served to put that money in your savings account to help prevent this type of scenario in the future?
Is This the Be-All-End-All of How to Survive a Crap Month?
No, it’s certainly not. However, this is something you should think about with the current state of the economy. All the prices are rising. People are getting laid off left and right. Housing is unaffordable. Cars are unaffordable. This is just one way of dealing with a short-term financial crisis. By short-term, I mean 1-2 months of crap income. Anything beyond that and this won’t even save you because you will have to catch up on all those bills your paying late. This only buys you about 30 days because the minute you miss the second payments, you’re in real trouble. So, it buys you 30 days to figure out what went wrong and to fix it.
This also assumes that you’ve already burned out your CCs, IRAs, savings accounts, stocks and any other hidden money that you can cash out quickly in order to pay your bills. In fact, your first clue that something was going wrong was when you needed to sell those stocks or take an early withdrawal from one of your retirement accounts. If you have to do that, you also need to start trimming your expenses and finding a 3rd or 4th job. I assume you’re already working two. Most people are. I have three, and I’m looking for a fourth. It's that bad out there folks.
(Second Disclaimer: Again, this is not professional financial advice. If you need professional financial advice, I recommend you find a licensed financial advisor or someone in the profession who can help you create a budget and get your finances under control.)
