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?
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