Paying Bills During Financial Hardship

I'm wallowing in debt right now and at a place I never thought I would ever be. Five years ago my fiance's house burned down and he lost everything and came to live with me while he tried to rebuild his life and his career. Three years ago he was hospitalized for having a parasite in his eye that caused permanent damage to his retina and forced him to quit his job while he recovered. Then two years ago I was terminated without explanation from my well-paying position and forced to take up temp work.

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Since then the temp work has ended and I found a new job paying $12k less than my old job. Our medical bills are paid off but I'm sinking fast in debt as all my plans and aspirations have become a wallow of misery. My mortgage has gone up $500 since I bought it because of "miscalculated escrow". I've maxed out all my credit cards from years ago trying to make up for the lack of income and my savings has been sapped dry. I'm at my wits end, my back is against the wall, and there is no possible hope left in me.

I've negotiated smaller monthly payments with all my credit cards, I've placed my student loan into voluntary forebearance and yet when the day is done my monthly bills are still $300 more than what I take home and that's before I ever factor in how much groceries will cost us for the month. I've been doing everything possible to eat as frugal as possible but every time we get an ounce of sunshine something else goes terribly wrong to drive us back down. Is Bankruptcy my only real option?

By Arielle from Virginia Beach, VA

October 19, 20090 found this helpful

Ariel, don't give up no matter what you do! I know it looks bleak now, but keep plugging away and slowly, you can begin making progress. Hubby and I, though older, were in your shoes just two years ago. We're nowhere near out of the woods yet, but are beginning to see progress.

I'll be praying for your situation, but meantime, here are some concrete suggestions for you:

Is your fiance still living with you, and is he permanently disabled? He may qualify for Social Security Disability - and depending on your monthly income, Supplemental Security Income (SSI.)

If groceries are too much for your budget, don't be too proud to ask for help.

Again depending on your situation, you may qualify for food stamps. Also, most food banks ask for a lot less documentation and are more than willing to help out as much as they can. If you don't know how to reach these resources, ask your local Information and Referral service. (In my area of Ohio, we have 211 service.) And remember: it isn't shameful to be in a tight spot financially - we're all there these days.

Speaking of your finances, are there any areas where you can cut back? For example, try unplugging as many electric and electronic items as possible when they're not in use. Turn off lights, TV or radio, and/or computer when you'll be away from it/them for more than, say, 15 minutes. Don't believe anyone who says your computer's monitor doesn't use electricity when the machine is off. If you go into a dark room and see those little red indicator lights, there's electricity in use whether the item is on or off.

To save water, turn off the tap while you brush your teeth. Have it on only long enough to rinse. Don't keep rinse water running for dishes; run a sink full (or better yet, 1/3 full) of hot rinse water.

Washing hands and laundry in warm or cold water frequently gets things as clean as hot water.

If you're out shopping and temptation strikes, ask yourself: do I really need this? This rule applies to that beautiful outfit in the store window, tacos or hamburgers after work, even chocolate bars and sodas while grocery shopping. Don't do your grocery shopping on an empty stomach if you can help it. If you can, forget buying even coffee on the way to work. Invest in a good travel mug and bring coffee from home. Brown-bag lunch as much as possible. You'd be amazed how quickly the budget gap can close when you exercise even minimal restraint.

Above all, forget trying to maintain your former lifestyle. You're earning significantly less; find ways to cut back on even necessary bills. If you can get a better deal on phone service with another provider, switch. Avoid paying "everyday" bills like electricity via credit card. That won't work, plain and simple. It was the hardest lesson for my hubby to learn, but now that he has (or has at least begun to,) we can make it to firmer financial footing that much faster.

As for those credit cards, even if all you can pay is $2 or so above the minimum required payment, do it. It'll chip away at your total debt load. And, every dollar you gain in available credit vs your credit limit will improve your credit score. Oh, yes, and *please* do your best to avoid late payments! Even one late payment goes on your record and can cause creditors to think twice about lending to you.

Last but not least, if at all possible, *stay away from payday loans!* I don't even like using our credit union's StretchPay loans, their version of a payday loan. Although payday loans at your local credit union don't seem to have such exorbitant interest, we discovered the hard way that payday loans are a vicious cycle that are nearly impossible to escape. They also sap your already limited resources.

Best to you, Ariel. I'm praying for you. -JustPlainJo, Springfield, Ohio

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October 19, 20090 found this helpful

Oh, I almost forgot: do try to get out of your current mortgage, if you can. Your credit may not be right for a prime-rate loan right now, but you don't need a company that'll make such a huge error on your escrow, either!

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October 19, 20090 found this helpful

Also, if you have a landline phone, cut back to the basics and do away with call waiting, etc. You'll see big differences in your monthly phone bills too. When you're out driving on errands, do as many as possible while in the area making fewer trips; thus saving gas. Cut back on cable tv and get the basics only. Go to thrift stores and buy what is needed if possible. Look for grocery stores like Save A Lot to do your grocery shopping in. Some churchs have food pantries set up and you can get some food this way free. It's a time to swallow pride and ask others for help; it's humbling, but necessary sometimes.

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October 19, 20090 found this helpful

Drop all cable/dish TV. If you have a cell phone, put it to the barest plan possible. Drop the internet. Limit yourself to 1 light on in the house at a time and make it a CFL. Drop paper and magazine subscriptions. Eat more beans, potatoes and rice. Don't eat out. Limit your driving. Buy no cigs, alcohol or junk food. See if you qualify for food stamps or any type of public assistance.

Are you off of a night? If so, see if you can find one or two children you can watch overnight in your home for some extra cash--post ads on boards at places which have a night shift, such as the hospital and nursing homes.

Can you rent out a room for extra cash?

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October 20, 20090 found this helpful

Most states offer free consumer credit counseling services which are designed to help people like you. To find one in your area, try googling "consumer credit/your state" Do not ever pay for credit counseling, most of them are ripoffs.

Also check out Angel Food ministries, which is run by certain churches around the country. You get a large box of food for $25.00, and there are no pre-qualifications. You just sign up and pay, then pick up the food on a specified day. One box is designed to feed one person for a month, and you can buy as many boxes as you like.

I know this is hard to do, but try not to worry about your debt, instead try to focus on what you want the end result to be. The more you worry about a problem, the worse it becomes. You have to believe that this is only a temporary situation, and that things will get better. Good luck

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October 21, 20090 found this helpful

Arielle, I sympathize with your situation. Everyone gave you some great hints, but I'm sure that you've already cut everything down to bare knuckles already.

Patti Lynn is the one that I was most impressed with, with her hints. She said to google and find out about FREE credit counseling in VA. I'm sure they have it.

She also mentioned Angel Food Ministries. Believe me, that organization is a God-send (for lack of another phrase good enough)! I use it myself here in NC. And there's no shame in using them. You'll be amazed at the people there. Google them to see what you can get and when. It's really amazing!

Also check out help from the state. This I know is very hard to do. But if you need it you need it. And it would get you through till you can get back on your feet. As far as other things you may need around the house, check out the charity organizations. You can get some great things there for next to nothing. Good luck to both of you.

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October 21, 20090 found this helpful

A good site to get great advice for free is debtproofliving.com. Try Modestneeds.org for a little financial assistance.

I LOVE Angelfoodministries.org!

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Anonymous Flag
October 21, 20090 found this helpful

If you choose bankruptcy you really need a bankruptcy lawyer and especially since you made payment agreements with your credit card companies. You can visit three or four lawyers for a free consultation and any lawyer worth a rip will give an up front flat free quote but you'll have to pay that fee up front in order to proceed but most will take payments so you don't have to feel you have to come up with the entire amount at one time.

Personally I don't suggest Angel Food Ministries because you really don't get a good deal when you calculate the amount of food you receive for the price. You would be better off couponing and/or buying items in bulk that you use a lot.

Don't be ashamed to get food from your local food banks, either! Since your fiance is disabled he can go and wait in line and the food banks give an awesome amount of food! I've recently become disabled and I go once a month for staples. The food bank I go to has seating and you take a number so it's not like you have to stand in line while feeling like you're going to pass out while waiting.

If you need to cut off cable you can check out DVD's for free from the public library for entertainment.

Call your local utility company because most have programs for a discount on your bill. I had to ask a few times before one caring employee said they did indeed have a program because of my disability, gave me a form to fill out and in just over a week I was approved and now my electric bill is discounted by 50%.

Trade services or items with neighbors. Almost everyone is hurting now and trade/barter is an awesome thing! I recently started cutting a neighbors hair (I am a retired hairstylist) and I trusted her enough to cut mine by walking her through how to do it verbally. We are both happy campers because neither of us have to pay a penny for a haircut now ;-)

I know there are so many other ideas out there so I pray you receive enough to be of help! Biggest thing is to look up and thank our Creator for what we do have and to stay positive! Dark thinking drags us down. Hope I've been of help.

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October 22, 20090 found this helpful

You can get yourself a Magic Jack for phone service if you have a computer and high speed internet. It'll cost $39.95 for the first year and $19.95 a year after that. I am in my second year of using mine and had my land line disconnected. No kidding, it works. Do away with cable, and do check out credit counseling. It's amazing what they can do for you. I, too, am a huge fan of Angel Food Ministries. The food is delicious and the price is much lower than the grocery stores. I know this isn't much help, but it has helped me stay afloat. Good Luck.

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October 22, 20090 found this helpful

This sounds like just the problem situation for Suzie Orman. Write to her and see what she says.

Don't use your credit cards. I know I have had to use them for prescriptions, etc, but it gets harder and harder to pay them off that way. I finally did and paid off my doctor;s bills as well. If you can fight the good fight...and I know you can, your credit score will be higher than anyone's. And you will get better rates on insurances and it may even help you get a better job! I am sure some employers check credit scores before hiring employees. A good score shows responsiblity.

Best wishes always.

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October 22, 20090 found this helpful

And remember, you're not alone!

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October 23, 20090 found this helpful

You have received some great advice here. I "second" several things - cut off cable, cut your telephone service to bare minimum, if your cell phone plan is expired, get rid of the cell phone (we lived years and years without one, and I admit, that would be a hard one for me to do), cancel your internet and use the library computer, cancel your cable and watch DVDs or VHS tapes or if you need cable for just watching TV, take it down to bare minimum. Plan any trips to once a week or when you have an appointment elsewhere - combine errands.

Do laundry once or twice a week, cut your dryer sheets in half, shower every other day, carpool if possible, look for a second job - it's near Christmas time and many stores hire Christmas help and if they really like you, they may keep you on for a while longer. I worked Christmas jobs along with a regular job many, many times. Sell unneeded items on eBay, Craig's List or at a garage sale. Take unused clothing to consignment shops for extra money. Eat out less and less. Register at every temp agency in town. Cold call prospective employers.

And above all else - cut up the credit cards and send them back to the credit card company. That way they know you're serious! Not to be shouting, but: don't use them for anything! It is much easier if you tell yourself that this is just temporary. You will be doing much better soon.

I've been in this situation in the past so I know it can be done. Just remember, there are no mistakes, only lessons that we learn.

Oh, and another thing, pay small credit cards first and when that card is paid off, take what you were paying on that card and apply it to the next smaller bill. Try to set up a budget.

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November 26, 20090 found this helpful

We too are going throught the same thing. Both my husband and I have ended up on disability and it seems for every good thing that happens we get a kick in the teeth and are sent right back where we started. I have no advice as I am in canada and laws are different here when it comes to money. I would like to say though that a hundred mile journey starts one inch at a time. Take each day one inch at a time. each bill one dollar at a time. Its long road your on with very little rewards, but if you take it one inch at a time and keep plugging away it will eventually become easier. Good luck and I wish you all the best.

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December 4, 20090 found this helpful

Update: Thank you all for your support and advice. A lot of the suggestions I've done already to trim my budget down to the deficit I had mentioned. My fiance got a work-from-home job as a telemarketer so I cannot drop my Internet because he needs it for his job. I did drop our cell phone plan to the bare minimum and when the contract is up I'll get rid of it all together but that won't be for another year. Next month he is going back to college to get a new degree and has calculated into his scholarships/grants/etc living expenses such as a partial amount for room and board.

Right now I am 2 months behind in my Mortgage but they are working with me and I have an appointment to meet a counselor this afternoon to go over my budget and file for a loan modification based on financial hardship. I did not qualify for the Making Homes Affordable plan but some others in my situation may, I suggest if you're behind in your mortgage or at risk of becoming behind you check it out ASAP.

My mother now provides us with meals twice a week that give us leftovers for a few days so our food budget has been cut down exponentially. I don't think everyone who responded understood the complete dire that I am in. Now, my idea of splurging is buying a can of fruit at the grocery store!

I'm so sick of peanut butter and jelly sandwiches. As far as taking up a second job I don't know if I have the energy for it. I am pulling out all my college-day tricks when it comes to food prep. I'm proud at my growing skill at dressing up leftovers. I don't smoke, drink and the only "junk food" I have is fruit when we splurge for it though I suppose technically a bag of oranges is more expensive than a box of HoHos I enjoy them more.

Additional suggestions I want to look into:

Renting out a room was an awesome suggestion. We can move the office into the bedroom and rent out that room for a few hundred I'm sure especially how close to the college we are.

Suggestions not sure about: Debtproofliving is a credit counseling service similar to the ACCC I spoke to previously that would create a "Debt Management Plan" where you pay the company to take over all your bills to help you get out of debt. The problem is that they help folks who actually have some options. When I spoke to them they wouldn't help me because my numbers just don't add up. It's not that I spend too much on frivolous things it's that I have committed myself to obligations I can no longer meet due to a severe reduction in pay and unexpected rise in unavoidable costs.

What was a "smart" budget on the conservative side at one income changes drastically when I lose $12k a year and my boyfriend loses his entire job. Our household income is $28k less than what it was when I made these obligations. That's like an entire 3rd person's income. It's no wonder I'm in over my head but the problem is that despite all this I make "slightly" too much for any breaks.

At least now I have options with my fiance finding employment he can actually do. (West Corporation for those in the United States who are good with computers and need a work-from-home job. It's telemarketing work at minimum wage but something is often better than nothing and you make your own hours.) I may actually end up working there on my spare time as well. Nights and weekends would be decent enough to bring in extra cash flow.

Another idea I had was to office up baking services on craigslist. I'm a pretty good cook--especially when it comes to baking so I thought I'd offer up home baked pies, cookies, etc for a modest fee + cost of supplies. I would charge half up front and half on delivery so that there wouldn't be a need for up front costs.

Instead of exchanging gifts this year my family is going to spend Christmas "making" things. We decided to have a big arts and crafts night in December to celebrate as a family. Between the different houses we have tons of random items that could easily be used to make something interesting. I have a couple boxes of scrap cloth, beads and old knick knacks and with all the ornaments and misc. junk hiding in my mother's attic it should be fun. To me, the holidays are not so much what gifts you exchange but the time you spend with your loved ones. I am truly blessed that I have such a loving and supportive family.

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December 4, 20090 found this helpful

Congratulations, Arielle, and you sound so much more positive now that you know there's a light at the end of the tunnel! Am giving you huge pats on the back for not wallowing in misery and aggressively working towards a solution! Have a Blessed Christmas and a Happy and Peaceful New Year throughout the coming year!

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December 5, 20090 found this helpful

I ditto what Deeli says. Just be patient and keep doing what you're doing and you'll pull through. Remember, this too shall pass. With God, all things are possible. Best of luck to you. Kathy

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December 11, 20090 found this helpful

I have been there and done that my solution was to start a home based business on the side and I did that and it is working.

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May 9, 20100 found this helpful

Pay your mortgage bi-weekly instead of monthly. You will in the end make one extra payment a year which will shorten the amount of time you have to pay and save thousands in interest. Talk with your mortgage holder.

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