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Can't Pay All Your Bills? Focus On These 4 Things.

“I don't know which I hate most my bills or the money I pay them with...”
― Stanley Victor Paskavich

“That was way less money than I thought it was.”
― Sarah Andersen
This post is "day 3" of a 30-day series aimed at helping you get your arms around your finances. So, while this particular piece of content is likely finding you at your greatest momentary need, the rest of the series is meant to give you a complete personal finance "primer".
So, I wanted to jump right into precisely what you should do if you're in a situation where you literally can't pay all of your financial obligations. Then, we'll unpack the overall process in more detail so you can see the ideas behind why I teach our students to approach this set of circumstances in this particular way.
So, if you're in a position where you can't pay all your bills, don’t panic, just prioritize and focus on these 4 particular things for now:
  1. Basic food - All groceries, no restaurants. You won’t be visiting a restaurant for a while unless you’re an employee. Weekly meal planning will help with both resource (money) and time management.
  2. Shelter - mortgage/rent, utilities 
  3. Transportation - may need to look at “downsizing” your car or moving down to one car for the family if necessary.
  4. Basic clothing - We’re talking hand-me-downs, thrift stores, and deep discounts. Malls are to be avoided at all costs again, unless you’re an employee.


Focusing on these "4 walls" will get you into a posture where you can live to fight another day. The next step after this would be to start gathering your bills, expenses and debts into a list, so that we can then plug them into a budget. And we'll cover that in more detail on Day 6 of this series.

Next, I want to talk about the "why" behind this approach and go into more detail that will hopefully answer some naturally arising questions from this process.


Be sure to download the free "quick start guide" that goes along with this series.


This Is All About Pressing Pause And Regaining Control

Perhaps your financial situation has reached a point where it’s so far out of your control that it’s affecting your ability to provide for the basic necessities of life. Not a good feeling, right?
As a result of your desperation, maybe you’re moving into an “awaking”  phase and are possibly even freaking out a little. And this “awakening” finds you in a place where you don’t have enough money to pay all of your bills. As the saying goes, “there’s just too much month left at the end of the money”. 
So, what do you do?
The first thing I want you to do is to take a deep breath. Inhale and exhale. You’ve come to the right place and I want to help you to overcome this immediate situation with wisdom, calm and confidence.
And more importantly than that, I want to get you to a place where you never have to deal with this again.

The Four Walls In Detail


One of the most important things to remember is that, if your creditors are calling, they really don’t give a rip about you, your family or your situation. I just want for you to have that in your mind as you're trying to navigate your situation.
Understanding and caring are not parts of their job description. They only “care” about getting their money and will stop at almost nothing to get it.
By the way, "creditors" may include ex-spouses and family members. This framework fits these types of creditors (perhaps with a little more communication) as well.
You have legal rights as a consumer, which we’ll get to in later posts. For now, know that you just need to protect your home and your means of earning an income.
More importantly though, I want to talk about what your laser focus needs to be during this stressful time. In this moment, you have to make the unwavering commitment that your basic household expenses are going to be your top priority.
Committing to this mindset will begin to create some financial margin and will allow you to start attacking (or in some cases, re-attacking) your debt.

One of the most important parts of navigating this process is getting to a "place of calm". These "4 Walls" will help you to do that.


1st Wall: Food

This should all be groceries. No eating out at all. Just try and understand that you’re actually in crisis mode right now. You shouldn’t see the inside of a restaurant unless you’re working in one, period. You can’t afford it at the present time.
You'll get there, it's just important to recognize that you're just not there right now. Right now you just need to cover the very basics and cover them as economically as possible. 

2nd Wall: Shelter And Utilities

Pay your first mortgage/rent and utilities first. Your second mortgage can’t be foreclosed on, so don’t be concerned about that right now.
Again, remember you’re in survival mode for now, so just stay focused on the very basic necessities. 

3rd Wall: Transportation 

Transportation ensures you have a way to get to work, to extra jobs and maybe to deliver the pile of stuff you’re selling on Craigslist and/or Facebook Marketplace. 
No fancy transportation and if you have a car loan, you should really consider selling that vehicle and getting something more affordable. 
If you have a second car, you may want to also consider selling that. Again, survival mode.

4th Wall: Basic Clothing 

Nothing fancy here. Absolutely no trips to the mall. We’re talking discount retailers, thrift stores and the kindness of friends, family and strangers.
You'll be able to "roll in style" again once we've gotten you to a little healthier place financially.

Next Steps Once You’ve Caught Your Breath:

Step 1: Get Cash - Get as much cash together as you can.

That means, sell some stuff, get some extra work and cut ALL of the fat out of the budget (assuming you’re budgeting, of course. If not, get your use this to start budgeting).

Step 2: Pro Rata Plan - Put your income down on paper. Subtract your “4 Walls”/basic expenses”.

This part can get a little convoluted and confusing so don't hesitate to reach out for help. Unfortunately we've seen lots of this with our student population: the more dire the situation the more complex it is simultaneously.
Whatever is left over, start to split between your outstanding debts. You can download the free Pro Rata form here.
To get the percentage of each debt you owe, divide each debt by the total amount owed. Take that percentage and multiply it by each debt.
That will show you which amount to pay for each debt with your leftover budget money.
Admittedly, this part can be confusing and overwhelming, so please reach it for help when you need it. 

Step 3: Send Letters/Make Phone Calls - As you make payments to your creditors, send a letter and make a phone call with each payment explaining your situation as well as your intention to pay.

Creditors don’t like getting partial payments, but something is better than nothing and communication about you’d situation and intention to pay is key.
Keep in mind that, in this process there really is no such thing as over-communication when it comes to your creditors.
The more and more frequently you communicate with them, the more accommodating, flexible and gracious they will tend to be.

What’s Next?

Once we’ve put this immediate “cant pay my bills” fire out, I want you to get fired up about never being in this situation again. This was precisely the situation that lead me to pay off $43k in 2.5 years. It was my "turning point" or "flashbulb moment". 
It literally changed my life forever. After I paid down my $43k in 2.5 years, I went on to save/invest over $500k over the next 5 years. It's incredible to see that once you get out of this paycheck to paycheck, can't pay your bills cycle, it's actually not all that difficult to start accumulating wealth.
So, I want you to download our free resource: “8 Steps To Erase Debt” plus the “8 Steps To Erase Debt Workbook” (Coming Soon) and begin to work through the material. If you need guidance, we can help you with that too.
This material, if applied consistently and correctly, will change your financial life forever just like it did mine. I promise you it works and it's totally worth it.

I just want for you to get started and to get radical. Like I mentioned earlier, living beyond your means is absolutely normal in our culture.
But it I don’t want you to be “normal” anymore. I want for you to be “weird” like I am; earning more, spending less than you earn, giving, saving and investing the rest. 
I want you to grab this opportunity and resolve say to yourself, “never again”! I used to be “normal”, too. Then I got weird…. REALLY weird.
And, weird just means that you use the desperate emotions you’re feeling right now as a catalyst to 1) get completely out of debt, 2) have at lease 3-6 months of expenses saved for an emergency and 3) NEVER borrow money again.
In out culture, that's weird! I want you to be weird too!! Come join the financial weirdos club!
So, let's go ahead and get you plugged into the “8 Steps To Erase Debt" and get you to "weird" once and for all!

The 8 Steps To Obliterate Your Debt

This is the blog post that outlines the 8 steps I followed to eliminated $43,000 in debt in 2.5 years.
And whether this is your first or thousandth time on the blog, I want to make sure you have this “8 Steps” framework that ALL of our content is centered around. 
These are the steps I personally followed to obliterate $43,000+ of debt in 2.5 years
Maybe your number is bigger, maybe it’s smaller. Either way the principles are the same and I want you to have them.
0. Stop All Retirement Investing (Until Step 4)
2. Starter Emergency Fund of $1000
3. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)
4. Full Emergency Fund of 3-6+ Months’ Expenses
5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)
6. College Funding (if applicable)
7. Pay Off The Home Mortgage
8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!
I’ve created a simple, easy to follow guide that you can use as your foundation as you navigate the absolute annihilation of your debt forever.


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When You Need More Help

And again, if you’re looking for some resources to get started, you can download our free budgeting printables. Also, if you’re in a place where you’re ready to kick your debt in the teeth, here's the link to our free “8 Steps To Erase Debt” guide for you to use as your foundation.
To your freedom,
This post may contain affiliate links. If you click & make a purchase, I receive a small commission (at no extra cost to you) that helps keep Zero Debt Coach up and running. Read my full disclosure policy.

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