Where Do We Begin To Catch Up On Debt?

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Leslie from Rhode Island asks:

Where do we begin to catch up on debt when we are behind three months on every day living such as mortgage, car payments, and utilities and IRS payments?


Jill: It is hard to give specific answers to your question without knowing more details about all of your finances. Here are some general suggestions about a couple of things that you mentioned. Some of these ideas may seem drastic, but if you are three months behind on everything including the IRS then you need to take a very honest and serious look at your spending habits.

In order to catch up on past due bills, you not only have to live within your income, you have to live below your income. It may be painful, but you have to figure out how to live below your income at least long enough to pay the past due bills and then to keep current on all of your bills.

If you can’t keep up with your mortgage, then no matter how much you love your home you may have to sell it for something less expensive. The same goes for your cars. You could try to get by with one car. That may not be as impossible as it sounds. My son and his wife both work and often only have one car. She found she could switch to evening hours at her job for a while until they could get another car. One spouse may have to take the other to work for a while. This may not be convenient, but declaring bankruptcy isn’t really handy either. Besides, if you declared bankruptcy and still spent more than your income, you’d end up with the same problem all over again. You could also sell you cars and get less expensive/used cars with smaller payments.

Cut back on utilities as much as possible. There have been times where I couldn’t run my air conditioner or I just used it when it became unbearable. Notice that I said unbearable, not uncomfortable. There’s a difference. Stop watering your yard. If your lawn dies, it dies. What would you rather have? Bills that are paid, no financial stress and a dead yard or lots of debt and stress and a nice green yard? I know it seems like there is no way out but it really is doable. Remember, you can’t spend more then you earn. Start thinking about each item you buy. Is that item really a need or just a want? Most Americans have a difficult time telling the difference between needs and wants. Do you really NEED it or do you just WANT it?

Cell phones are still a biggy. I was talking to a woman who was frantically trying to keep the creditors at bay. She said I just don’t have another place to cut back. I said what about your cell phone. Boy the look of horror on her face. We all insist we need a cell phone and they are nice especially in an emergency but that isn’t the reason most of us have them. We have Smart Phones because they are a fun toy for us to play with and to use to interact on social media. You can get an inexpensive little phone that doesn’t have all the bells and whistles to use for an emergency.Here’s a new concept for some to try – visit with your neighbor or friend eyeball to eyeball instead of texting all the time. Much cheaper then paying for an expensive phone. I know, I can’t believe I even suggested such a thing but hey if your are really serious about saving you will do it.

If you often wonder where all of your money goes or if you need a more frugal mindset, check out Dig out Of Debt and learn more about how to keep more of your money.



  1. Tammy says

    we were in the same situation we cut as much as we could, refinanced with the “making home affordable” government program and are doing settlements on our “closed” credit cards. example our discover card is 8400.00 we are paying 1600.00 to settle it this month. if you have closed credit cards i would suggest this, yes it will hurt your credit score but it is already been hurt so why not take advantage of this, don’t take the companies first offer either i spoke to discover 4 times before i got 20 cents on the dollar. this time next year we will only have our normal household bills and our mortgage payment. also you can try sending 20.00/mo to doctors/dentists etc. when one is paid off snowball the amount to the next one etc. take care of the IRS and your house first that is the most important ones, there is an old saying “don’t mess with the IRS”… it is true.

    • says

      I have to say I do have an issue with this. While this is a good idea and I do think you should do what you can to get out of debt I do think it’s wrong to take advantage of these kinds of programs and others like bankruptcy. The problem I have is when you charged up these accounts you said you were going to pay them back.

      While I do not agree with them charging huge amounts for fees etc., you did say that you would pay back the money charged and you would pay the interest on that account in exchange for using their money. So in my opinion it is stealing and lying if you don’t at least pay back the amount that you charged. If the company wants to work with you and agrees to drop the interest and finance charges that is their choice but I do think it’s flat out wrong to not at least pay back the amount you borrowed.

      I also think this is true with bankruptcy. Unless you had some unforeseen medical expenses then you should not be claiming bankruptcy unless everything has been done to pay it back. Even with medical if you are spending on fun things instead of buying medical insurance then you need to pay the bill.

      I see it TIME AFTER TIME AFTER TIME of people who say they just “can’t pay it back” but yet they are eating out, doing their hair and nails, going on vacation etc. Mike and I paid off our debt on only 22K a year income. It CAN be done.

      Tammy I’m not saying that you are doing anything of these things but I do want people to be aware of what is really happening.


      • Jeanne T. says

        I agree with you, Tamara. Three of our neighbors (all single/divorced women) are severely underwater on their mortgages, all over $100,000 and one who is underwater about $150,000. But guess what? They refinanced with their “0bama mortgages”. At least one of them told my husband she couldn’t qualify unless she stopped paying on her old mortgage. So she stopped paying. And I suspect the other two did the same thing.

        They really don’t see that they’ve done anything wrong, or that it’s those who abide by the law and pay their debts who are ultimately paying for this mess.

  2. John says

    If you are not familiar with Dave Ramsey (www.daveramsey.com), he says to take care of the four walls of your home. Here’s an example:

    Rene was in the remodeling business, but the market is now slow. He is now upside down on his condo and has credit card debt. He makes $3,500 a month. Credit card companies are screaming at him and he’s not sure where to start. Dave explains to him about what it means to maintain “the 4 walls”.

    ANSWER: Credit cards can scream. If it dings your credit, then so be it. Get current on your first mortgage because it’s the most important thing to keep current. Your second mortgage is the second most important thing.

    Here’s the order of attack. Pay food, utilities, then your first and second mortgages. There’s no point in being current on the second mortgage and not current on the first because the second won’t foreclose. When you pay those, along with clothing and transportation, that’s taking care of the basics and providing for your household first. That’s called funding the 4 walls. Pay your necessities first. Once you’ve done all that, then you can attack the credit cards.

  3. Maureen says

    My files are now in order. I know who I owe and how much. My cel phone is for emergency purposes only. I Got a box, for my old tv, and cancelled my cable..what a savings. I can watch the two shows I love on my computer. I am $1,800 in debt but working to find other ways to cut my expenses. If you want to insure you don’t pay twice, keep all receipts in any form you get to show you paid. I paid the $40 medical bill in person and got a receipt. I got a notice two months later that my payment had not come yet and they wanted me to pay a $300 late charge. I had the receipt that I got and gave them a call to let them know I paid. When I gave them the receipt number, it allowed them to find the payment and cancel my $300 late payment.

  4. Karyn says

    I agree with you Tawra. If i can’t pay for something now, I most likely can’t pay for it in 30 days when I get the bill. I rarely clothes shop, I use coupons for just about everything, and I buy meat at the grocery store when it’s on sale and on clearance. I don’t have alot of fancy foo foo stuff, but then I don’t have any credit card debt either. It irritates me when people file bankruptcy or settle their credit card debt because like you said, they agreed to pay for it when they bought it. It’s not the credit card company’s fault they charged too much and are behind. I personally know people who have debt out the ying yang, shop & charge all the time, have a house cleaner, top of the line cable, but are three months behind on their electric and all of their other bills, and they both only have one job (get a second one). I don’t charge because I don’t want the bill coming in in 30 days, why don’t they?

  5. Tammy says


    Here are some suggestions, if you have a Consumer Credit Counseling Service (CCCS) in your area, talk with one of their knowledgeable consultants. The first thing they have you do is write out all of your expenses. You will find in doing this areas that you did not even know you were spending money on or did not think of as being a big deal that you don’t need. Second, they will work with the credit card companies, close your accounts, and try to get discounted rates. You do pay off the entire balance, but not at 20% or more interest, something more manageable. Some of the creditors may even reduce the debt considering you’ve paid them interest on the bill and may have paid them for the amount once over or more during the course of time at a high interest rate. You pay the whole amount due to them. This actually rebuilds your credit and gives you breathing room. By the way, this is a free service and this is not one that promises to rebuild your credit by simply writing the FICO offices. You do the work, they help you get it into something manageable.

    Contact the IRS. Do not be afraid of them. If you had a good record with them and something that really hurt your finances came up, talk with them. They can usually rework your payment plan. A friend of mine had just that happen. Her husband’s father passed away and they had to take time off work (they ran their own company) to help with final details, then just a few months later, her own father was in an accident at work that killed him. Again, they had to take off work and help with her family. On top of that, the workload dropped prior to, during, and after, so it all hurt. They called the IRS and explained the situation. They told them that they had good credit with them and were willing to work with them.

    As far as your home, find out if there is any way to get extra income – at least until you are caught up. Talk with the mortgage company. They cannot help people who do not call and just leave things in the air. Try to avoid going into foreclosure. If the house is worth more than you paid for it, the bank will likely work with you. If it is more house than you can afford right now and you are upside-down, see if you can find a real estate investor in your area that you trust that can help you to short sell your home. You can find a reasonably priced apartment to live in or rental home until you are back in better financial shape. A short sale is not the best choice, but considering you are three-months behind and banks do not want to own homes, it could be the best solution for you, the bank, and the future owner.

    Dave Ramsey has great suggestions. Check out his website. See if the local library has a copy of his book. Maybe a family member or friend who can’t help you out of the bind would at least be willing to spot you the money to purchase his book. Another resource worth looking at is crown.org. They have a number of free resources. When you look at what the percentage they recommend that you should allocate for items you are spending, it can really make you step back and re-evaluate your spending altogether and develop a workable plan.

    I’ve had things happen in my own life that could not be planned and totally tripped me up. You can get through this. Talk to your creditors and seek trustworthy help from people who have gotten through this.


  6. Sheri says

    You got me looking at Dave Ramsey. I’m listening to his show online right now! I’m looking at his Starter Special package. A decent price if it will work! I know, we are the ones that have to do the work. Maybe this is what we need to get out debt paid off! Sometimes it helps to see someone else’s plan.

    Thank you for sharing!

    I agree with Tawra. I believe we should pay what we agreed to. Only, we didn’t agree to the interest rates we currently have! Last year, a few went up to get ahead before the law changed. We have to get the snowball going the other way!

    Thank you again!

  7. brenda says

    What if you live below your means, make monthly payments on bills owed, rent, have two older cars, and eat cheaply, no entertainments, etc. and still owe??

    • says

      First Brenda you need to make sure you have no extras what so ever. I have found over the years most people have things they thought of as needs when they are really extras. They are so used to these things and may even do less then many others but still have some places to save.

      In my Penny Pinch’n Mama I go into some very “die hard” ways to save which most people would shake their heads at. Here are some examples. Now keep in mind I don’t do this all the time only when I had debt or am trying to save. I am still careful even when I do have money but I allow myself to do a little more for my comfort now then when I was paying off my debt.

      I rarely used my a/c even when the temps were over 100 degrees. I keep my thermostat at about 58 degrees in the winter and often turned it off at night. I bought nothing for my home, no new clothes, kept my running to the store etc. to a minimum (did you know the average person goes to 5-7 places a day?), do you you need to find some place with less rent? Or do like I did and moved to a less expensive part of the country.

      I know many people talk about how they save on books and only pay $3-$5 for a book. That is a good deal but I usually pay only $.25 for my books and when I had debt I bought no books at all but went to the library or did without. I started showering instead of baths and showered less to save on my water bill. I make sure I am careful with my toilet paper, detergent,shampoo.
      I didn’t own a computer or have internet until we had the business and I use our business one now otherwise I don’t know if I would have one. I wouldn’t have a cell phone and for some times in my life have had no phone at all and actually managed to live.

      This is just the tip of the ice burg of things people don’t often think about doing. If you have really truly looked at everything and have no extras at all then in some cases but they are rare you need to just make more money.

  8. lynn hairston says

    I think its wrong that credit cards are allowed by law to charge ridiculous intrest rates they do,I think a limit needs to be set.No annual fees.I opened an account with capital one.I had a 1200 limit.They set me up with a credit check report every 3 months which I didn’t ask for.They didn’t bill me until one month and it was for the past 3 months,that put me over the limit and they had the nerve to charge me a over the limit charge.They wouldn’t work with me and take those charges off so I said to heck with you crooks and stopped paying.They froze my checking account with a garnishment twice.They finally got all of the 1200 but still are hounding me to pay 1000 dollars in fees.I paid them what I owed them.They r the most agressive unrelenting credit card company I have ever encountered.They wouldn’t agree to the settlement I offered.The garnishment court was a 3 hour drive away so I couldn’t go and did not know I could have requested a change of venue.The freeze caused my other bills to be insufficient funds.Wow what a mess.No more credit cards for me……

  9. Trish says

    Tawra – I have not been receiving your emails. I got them all the time but haven’t gotten them for several weeks. I have checked my junk email folder and they are not there. Please check into this as I love receiving your emails!
    Thanks in advance

      • Rose says

        Help! How can I dig myself out if I am already there due to health issues? I got ill and couldn’t work as much and I stayed behind three months. Now I’m struggling to keep up with basic needs.Thank you.I already had given up on all extras before I got sick so now it’s just trying to stay afloat.

  10. Marcia says

    What happens if you want to do drastic things to get your debt down but husband does not want to do those sort of things? I am willing to do what it might take but he isn’t willing to give up a lot of things. I don’t want our home to be a war zone but I am a little tired of feeling I am the only one who is willing to sacrifice. I am not working right now but I am doing things I really don’t want to do to make money on the side (jobs are not plentiful in our area right now). He does work a responsible job and I don’t think he ought to work a second job. Any suggestions? I think he wants to get our debt down but we have different ideas on how it should be done.

  11. may says

    I promise myself that I will follow all your advices to get out of the debt, start from today I’ll use debt card for gas & grocery ( those are necessary things for daily).
    That’s the first step for me to learn to watch my money.
    Thanks ~May

    • says

      You go for it May. Remember to do it slowly and not to overwhelm yourself and if you do happen to back slide you are still better off then when you first started so get up and keep going. From the sound of it though I don’t think you will be back sliding at all. You sound very determined. Just holler if you have any questions or need help.

        • says

          One thing you need to get a different mind set. Where many people go wrong is they think they need to borrow more or go into debt more to get out of debt. If you think about it there is no logic in that idea. You are just digging a deeper hole. Borrowing to get out of debt makes no sense. I and many others had thousands of dollars of debt I never once borrow to get rid of it or used a credit card for anything at the time so it is doable. I can’t go into many details here but start reading the web site and check out our books we cover your problem and then some.

  12. Helen says

    move in with your mom or your kids. they will understand that you just have to cut. do without the second car if possible. you have to love cashier or fast food parttime jobs. have no go days and no spend days. anything you do to help yourself save or not spend money, is a good thing. it’s amazing what a really frugal person can come up with.

  13. Mary Jane says

    Always, always, always know the difference between a need and a want. Lots of wants are masquerading as needs, and no doubt, they would be nice to have even if they are modest, but when you get down to it, they are still wants. I suggest people talk with others who have been through really hard times, and have frugality down to a fine art without apologizing for it. Those raised during the Depression, the people on this web site, and Jill’s books are examples of these people. I don’t know how many times I have heard others say that someone “can’t live like that”, when in fact countless people do, for the long haul, and many do not feel deprived. An example of this is when I finally made an appointment to have my hair cut and styled at a hairdresser’s shop, about 15 years ago. The hairdresser asked me when was the last time I had my hair done in a shop. It was only then that I realized that I had cut my hair in a shop when my daughter was 6 weeks old. That daughter was 18 years old when I was asked this question. I had found friends and family to trim the bottom of my hair for 18 years, while I grew it out, to save money for more important things. This incident made me think of a friend of mine who regularly had money problems, but also regularly got her hair done (along with her daughters) 3 to 4 times a year, in a shop. It is a real treat to get your hair cut and styled in a shop, but if you are having trouble making ends meet, that hair appointment, lovely as it is, is a want, and not a need. You must stop looking at credit cards and all other forms of credit as “disposable income”. If you do not have the money for something, you cannot buy it.

    • says

      So true Mary Jane. Tawra and I were talking this week while she was doing her nails about how so many people don’t know how to do a good job at painting their nails because they don’t do it themselves but think they have to have them done. Take that one step farther and there was a time when I didn’t even have the money to buy the cheapest polish to do them myself. I kept them neatly filed and clean and I even lived to tell about it.
      One of my favorites is we never went to have a perm done years ago. You always bought a box of perm at the store and did it yourself. What is even funnier is it use to be very complicated and a pain to do. Now the perms are 90% easier to do and yet we pay big money to have it done. The excuse too that home perms don’t turn out is an excuse because I have more perms that I went to have done (and that wasn’t too often) not turn out as home ones.


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