Playing catch-up on your bills....oh the joy. The holidays have come and gone, the new year is in full swing and the passing days are not slowing down! Neither are the bills. January passed so quickly, and I still see people trying to catch up on their bills from November and December. Getting behind on your bills is no joke, and some days it feels like it is impossible to catch up, much less save money. However, tax refund season is right around the corner and you can catch up on your bills then.
Hold up.
Let me flip the switch here and approach this from a new angle. While it sounds like a great idea to catch-up on your bills with your tax refund, it isn't the smartest thing to do. Getting ahead isn't a matter of working harder, it's a matter of working smarter. What we're conditioned to believe when we're poor and have poor-to-fair credit is that we can't be picky with our lenders (or much else for that matter). So, we get loans with predatory companies who will lend to us because we need new cars, new TV's, appliances, etc. When we make big purchases, we agree to interest rates that are WAY above our means. We realize we can get approved for credit cards, so we open a few, intend to spend responsibly, but find ourselves maxing them out. Then we realize the interest rates are too high on those as well. Between our car notes, credit card bills, furniture payments, house payments and everything in between, we find ourselves falling behind. We start feeling like we're drowning.
What I'm essentially saying is, break the pattern and change your financial dynamics. I've asked this question to my clients so many times that I've lost count. Why would you spend a big check you're about to get catching up on bills when you know you're just going to fall behind again? Unless your living expenses fall drastically and you get a big raise, you know good and well your situation is not going to change!
I've said it time and again - bankruptcy is not for everyone. But if you're relating to what I'm saying or you've been considering bankruptcy recently, and somehow you just keep coming back to the possibility of filing, it's probably time you sit down and truly consider your options. Get a pen and paper, sit down with your spouse or a cup of joe and just dig in to your bills. Figure out how much you owe every single month. Ask yourself some hard questions:
"Can I cut anything out of my monthly spending?" Can you cut your phone bill in half? Can you change your cable package to a less expensive one, or cut cable out all-together? When was the last time you shopped around for new car insurance to see if you're paying the lowest possible amount? Can you spare the time to cook rather than go out to eat? If you don't have time throughout the week, consider meal-prepping one to two nights a week!
"Do I really need these credit cards?" Yes, credit cards are wonderful, helpful tools! They build your credit...until they stop building your credit because you can't afford them anymore. Do you really need lines of credit for your favorite stores? Should you cut up your unsecured cards and get secured ones instead?
"Can I consolidate my student loans?" The monster of them all, student loans. When it comes to these loans, there isn't too much we can do except pay them. You can get forbearances or deferments, but even those are exhaustive. Definitely try to consolidate those loans! Here is a helpful website that describes income-based repayment options. Check it out!
"If something were to happen to me or my family, would I have any money?" If you were to get into a wreck (God forbid), lose a job, need a new lawn mower or refrigerator, miss work because of sick children or family members, or catch a cold and miss work for that reason, would you still be able to afford your monthly bills? Or do you hang in the balance when you miss a day of work? Some of you are so tight on money that you can't even afford to miss half a day!
"What does my financial future hold?" If you are not even seeing passed today or pay day, it's time to change your situation. We need to get you in a position where you start securing your future once and for all and start saving money.
My advice: Get control of your debt NOW, and put your tax refund in a savings account. Be prepared for adversity! Have money in the bank! Have some cushion in your pockets! If you are owed a refund and you don't owe a federal or state debt, get that refund back and let it help you start a new chapter in your financial success.
Let this motivate you to change a few things. Even if you don't file bankruptcy, I truly desire to inspire you all to gain peace in your finances!