4 Important Steps to Take when Facing a Decrease in Income
When facing an unexpected job loss or a reduction in income, it is natural to worry about paying your bills. Here are 4 steps you can take immediately to help reduce the stress due to financial hardship.
- Prioritize your Bills
You want to ensure that you pay any bill where nonpayment could result in the loss of housing, transportation, insurance, or negatively affect your ability to work.
Examples of priority bills are:
- Car Payments
Non-priority bills should be paid after you pay the most important bills. Remember, a credit card company cannot repossess the gallon of milk you bought, but not paying your rent can result in being evicted.
Examples of non-priority bills are:
- Credit Cards
- Medical Debt
- Unsecured Loans
- Review Expenses
Cut out any non-essential expenses and look for ways to save. Common ways to save money include:
- Canceling cable TV services and gym memberships
- No longer dining out
- Bringing your lunch to work
- Buying generic brands when possible
- Using coupons
- Stick to your budget
Make sure you are sticking to your budget by:
- Spending money only on necessary items
- Considering the cost of small purchases, they add up over time
- Writing a shopping list and sticking to it at the store
Remember, saving as much money as you can during a crisis means less time catching up on bills when the crisis is over!
- Contact Your Creditors
Do not be afraid to talk to your creditors. Your creditors may be willing to:
- Reduce your payments
- Provide extensions
- Reduce interest rates