Too Many Bills, Not Enough Income: What to Do

It can be a struggle to make ends meet when you have more bills than you can afford to pay. When your income just isn’t enough to handle everything that you owe, you might worry that there’s nothing you can do.

Fortunately, that isn’t the case. If you have too many bills relative to your income, here are some potential solutions.

Review Your Spending (and Create a Budget)

Typically, the first step you should take is to review your spending. That way, you can get a clear view of your expenses and compare them against your income.

Examine all of your spending over the past month or two. Identify each line item to determine how much you spent and on what, creating a running list for each month. Then, total up your spending categories, allowing you to see how much of your income is going where.

A budget might be all you need to get back on track: simply being aware of where your money is going will make you more conscientious about what you spend your money on. However, if your income literally can’t cover what you owe, a budget alone might not do the trick. In that case, you’ll want to incorporate other strategies, allowing you to make changes that will help you move in the right direction.

Reach Out to a Reputable Nonprofit Credit Counseling Agency

Nonprofit credit counseling agencies can be an exceptional resource when you can’t afford to pay your bills. Often, they can help you examine your income and budget, allowing you to work together to come up with a viable plan. That alone can make the services valuable.

However, if you genuinely don’t have enough income to cover your obligations, credit counseling agencies can work with your lenders to find a solution. Often, they can get interest rate reductions and create a simplified debt repayment plan.

In many cases, there are fees for using a debt repayment plan. Mainly, this is because the agency will oversee the process. You’ll send a payment to them each month, and they’ll distribute the funds to your lenders.

Even with the fee, credit counseling agencies can save you a bundle while making repayment less stressful. Just make sure you vet the organization thoroughly to avoid potential scams.

Speak with Your Creditors

Many creditors have programs designed to offer people some protection if unexpected financial situations arise. For instance, there are low-income programs at many utility companies and hospitals. Lenders may also have forbearance options for consumer debt accounts.

You won’t know what’s available if you don’t ask. So, if you’re about to miss a payment, call those companies and see if there are programs available that may be able to help.

Contact Charitable Organizations in Your Area

Oftentimes, people have trouble paying their bills due to a one-off event, and not an ongoing issue. For example, an unexpected medical bill might mean you don’t have enough money to cover rent, food, and debt payments.

In these cases, you may be able to get help from local charitable organizations. This is especially true if your financial troubles mean you might miss rent, lose utility services, or be unable to buy food.

Community service organizations, religious institutions, and similar nonprofits are all worth contacting. You can also check for emergency funds through local or state government agencies.

If you’re not sure where to begin, consider calling 211. That service can help you learn more about programs in your area.

Apply for Government Benefits

Low-income households may qualify for an array of government benefits. Some classic options are food programs like WIC and EBT. With those, you get money that you can use at most grocery stores, allowing you to reduce how much you have to spend out-of-pocket.

There are also options that can reduce other expenses. You may qualify for housing stipends, free or low-cost medical insurance, and more.

In most cases, the easiest way to learn about programs is directly through the associated government agency. Usually, health and human services departments are your best starting point, though you may want to reach out to housing and child services organizations, too, depending on your situation.

Cut Unnecessary Subscriptions and Memberships

Many people have multiple subscriptions and memberships that they pay for monthly. Cable television, gym memberships, and streaming services are all prime examples.

If you’re struggling with your finances, cut every unnecessary subscription or membership that doesn’t come with an early termination fee. For those with fees, determine if it costs less overall to cover than cost than to remain signed up and if so, consider canceling them, too.

Remember, you can always sign up again if your situation changes. But until then, you may have to get a bit ruthless while you get your budget under control.

Downsize to a Smaller Home

In many cases, housing is the biggest expense a person shoulders. Since that’s the case, downsizing could be a way to dramatically reduce your spending in fairly short order.

If you rent, check your lease to see if you’re obligated to stay or what conditions need to occur for you to move out without a penalty. Then, explore your local market to see if there are lower-cost options available. Even if you have to move into a smaller place for a time, you can always move again once you’re back on track financially.

For homeowners, you’ll want to consider your current equity to determine if you can move without incurring an extra cost when you sell. After that, explore your local market to see if lower-cost options – either renting or buying – are available. If so, consider listing your home.

Alternatively, homeowners could explore renting out their house. If the amount you could earn in rent would easily cover your mortgage, then you could potentially keep the property. Just factor in the cost of property management if you won’t want to serve as a landlord before you decide. If the math makes sense, you could move into a smaller property for a while to reduce your costs, use the rent to cover the mortgage, and move back in at a later time.

Consider Debt Consolidation

If your monthly bills are too high, but you have good credit, a debt consolidation loan may let you get back on track. With these, the loan pays off the debts you’re consolidating. Then, you make payments on the loan.

The benefit of this option is that you may end up with a lower average interest rate and smaller monthly payments. Additionally, it simplifies your budget by rolling several debts into one payment.

If you own a home and have equity, you could consider a cash-out refinance loan instead. Essentially, you’ll refinance your mortgage and request additional money above your current mortgage balance. Then, you can apply that cash to your debts, rolling them into your mortgage payment.

Just be aware that cash-out refinances do involve your home as collateral. If you have issues repaying that debt, the lender may move forward with foreclosure. Since that’s the case, if you’re concerned that you won’t be able to make that payment, it’s not always the best choice.

Start a Side Hustle

If reducing your expenses isn’t an option, then your next best bet is to boost your income. With a side hustle, you can potentially bring in more cash, giving you extra room in your budget.

If you’re already working full-time, look for flexible options. Gig work like app-based delivery driving could be a suitable choice, and you can also consider various kinds of freelance positions.

If you’re working part-time and could support more hours with ease, you could see if you can transition to full-time at your job. If that isn’t possible, you can either seek out another full-time role or get a second part-time job to cover the gap.

Focus on the Right Bills

If you’ve explored the options above and can’t find a solution, focus on the right kind of bills. Generally, you want to make sure that four basics are always covered – shelter, utilities, food, and transportation. If you have money left, then what comes next may depend on your situation.

For anyone with ongoing medical needs, continuing healthcare costs are also a necessity. Beyond that, you may want to focus on any collateralized debts associated with must-have items before moving on to non-essential collateralized or unsecured debts. That way, you’re preserving what’s critical first, ensuring any missed payments are strategic instead of haphazard.

Once you know what payment you’ll miss, contact the creditor directly. That way, if any arrangements are possible, you can work with them from the beginning. While not all creditors will have much to offer, it could allow you to minimize the harm or learn about programs that can help. Since that’s the case, it’s always best to be proactive, increasing the odds that you’ll find a solution.