Day Two of the 1 Week to a Better Financial Future Series: Getting Current on Bills that are Behind

This is the second in a 7 part series designed to help those who are in a financial struggle. Three years ago when my husband and I found ourselves on the short-end of the financial stick and there was more month than money we spent 7 days turning our finances around. These 7 days were based around the Dave Ramsey Plan but included some additional baby-steps that we needed to get straight in our lives. As Dave says, "Debt is only a manifestation or symptom of other problems."

I am not a financial counselor and all of my advice is just that-advice. Take it or leave it. But these are the things that my husband and I did to turn around our lives. If you know someone who may benefit please feel free to pass this along.

On Day One you added up the total amount of money you need to just survive and pay out your necessities for working and living. You now have either a positive or negative number to work with for the rest of the steps. If you have a negative number you are going to have to work harder to get things turned around. But it can be done.

Day Two:
1. Make a list of all the necessity bills you are behind on and how much it will take to bring it current.

Using the money that was left over after paying the normal monthly necessity bills, make a plan to get current on any "necessity" bills. This means if you are 2 months (owing $210 plus the current month) behind on your electric bill and 1 month behind on your car payment (owing $250 plus the current month) you need to get current on these before you assign any money to other "non-necessity" bills.

2. Take the list of available money and decide who is getting paid what amount and when. Let the companies know your plan.

We were behind on our electric bill (owing $275 plus the current bill of $183) and behind on our home phone bill (owing $65 plus the current bill of $65). From our day one numbers we knew that we had an additional $300 per month after paying the necessities to use in order to get current. We paid the normal monthly amounts to all our necessity bills plus the additional $275 to the electic company. We added the other $25 to the phone bill but it was not enough to bring it current. I then called the phone company and explained that we knew we owed them the additional $65 but were only able to pay $25 of it. I told them the additional $40 would be included in the next payment. They accepted that arrangement and didn't cut off our service.

We were fortunate to see that we were getting behind on our bills and put a plan into action within a couple of months of the realization that if we continued on the financial path we were on that we were surely doomed. For some people that recognition may come even later and they have a lot more to pay to get current on the "necessity bills". Notice that at this time we were not paying on our credit cards or medical collection bills. We were taking care of the necessities first and foremost. Everyone else had to wait. This was very hard. The credit companies called and demanded money and I just simply told them that we could not pay them on that day but we were working out a plan. Again, do not pay them until your necessities are paid up to date.

3. If you are behind on everything, continue to pay all of the monthly minimums on all of your bills. In other words, don't get more behind on one so that you can get current on another.

This advice usually goes against what you think you should do. Most people think, well the electric is 2 months behind but the car payment is 3 months behind so I'll take all the money and just pay the car payment up to date. This doesn't help you because next month you will get behind on the car just to pay up the electric. You are just running in circles. It is much harder in the long run to pay only one or two bills current and not pay anything to the others.

If you keep paying each bill the monthly minimum they are much more likely to help you out through extensions, etc. We called Ford Credit when we knew we were about to get 1 month behind with them and they allowed us to not pay the bill that month with no penalties. They added it to the end of the loan. Yes, this does mean more interest for them and one more payment for us at the end but it worked for us right then when we needed it.

4. At this point, no one else is getting paid.

I keep saying this because it is so hard to actually do. This means if you have outstanding medical bills, credit card bills, etc. they are not getting paid right now. It is really stupid to have all of your non-secured debt paid up to date and be behind on the necessities you need for daily living. The credit card and collectors are good at their game. They hound you and hound you and possibly even threaten you until you agree to pay them some money. Then you get your electricity further behind and possibly cut off. That is just dumb people! But they might sue me, you say! Of course they can sue you eventually but hopefully by then (because it takes at least 6 months or longer to actually go through the system to get a judgment) you will have a plan and some money and can avoid all of that!

After Day Two you should know the following:
1. Which of your bills are necessities that must be paid in order to work and live
2. How much money you need each month in order to pay your necessities
3. How much money, if any, you have left over after paying your monthly necessities to pay toward your bills that are behind
4. Not to pay any credit card bills or collections until all of your necessities are paid up to date


If you have ever been behind on your necessity bills and have a suggestion or helpful hint for those trying to get current please leave a comment.