About Chris G. Expertise I am a financial counselor that can answer consumers' personal finance questions in following areas: - Beating & Reducing Debt - Budgeting - Building Savings - Careers & Extra Jobs - Dealing with Collectors - Identity Theft - Money & Marriage - Personal Insurance.
Experience The past four years in the banking field have given me a heart for helping families with their finances to better their financial future.
Question I have recently gone from making 92K to 40K. I have about 6K in bills each month and have been using my savings along with credit cards to keep up. My savings is gone and my bills will be due soon.
I do not know how to handle the credit companies etc. I need to keep my credit up in order to get a better job in the future to get back on my feet.
Please help. I have never been in a position where I could not pay my bills.
Thanks,
David
Answer Dear David,
First of all thanks for the question. It definitely appears that you're in a tight situation. Even making $92,000 each year doesn't leave much wiggle room with 6,000 a month in bills. The first thing to look at is the two basic ways to get out of this mess. The first thing you can do is raise your income, and the second is to lower expenses. In your case, you will probably have to do both.
If I were in your shoes, I would work very hard at either getting a better paying job, or an extra job to help make up the difference. You can also raise some extra money by selling a bunch of stuff in a yard sale (most people have useless stuff laying around.) The second thing to do is to cut off or reduce any unnecessary bills that are coming into the house. Be sure that you're not going to get hit with a huge fee to cut them off, but depending on the situation, it might still be worth it.
Remember the priorities that you should budget. It goes in this order: 1)Food 2)Shelter (mortgage & required utilities) 3)Transportation 4)Clothing 5)Other secured debt 6)Other unsecured debt
This means that the credit cards will be paid last! Don't put off eating in order to pay them. If you have money, be sure to pay, but if you don't have the money, pay them last.
Your credit might get a little banged up in the process. This will be normal. Don't worry so much about employers checking your credit score/report. It's reported everywhere that they can, but the truth is that most don't bother to check it. The FICO score is a terrible way to gauge whether someone will be a good employee. If they don't hire you because of your FICO score, then they have poor judgement. And if they have poor judgement, I don't want to work for them.
If you are unable to pay your creditors, you might want to send them a signed, business-like letter explaining to them the situation and the fact that you WILL pay once you have the money. When you don't pay your debt for awhile, they will assume that you aren't going to pay it. Writing this letter will put that assumption to ease (most people do not take the time to contact them like this.) It won't always help with every creditor, but it won't hurt either.
I hope this has helped. I wish you the best as you work through this thing. Remember that regardless what happens, you're going to be just down the road, so try to take some time out each day to take a deep breath and relax.
