How to Budget When You Are Behind on Your Bills

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How to Budget When You Are Behind on Your Bills

How to Budget When You Are Behind on Your Bills

One of the hardest things to manage when it comes to your money is trying to figure out how to make ends meet if you are broke. Creating a budget becomes even harder when you are behind on your bills and don’t know where to begin.

The basic budgeting steps remain the same, but your spending might be a little different. If you are behind on your bills, you need to spend a little more time assessing your situation to determine how bad things really are.

If you are in this situation and you are trying to create a money plan to get yourself out of it, here’s what you need to do set up a budget and get back on track.


If you’ve been putting off looking at your financial situation because you’re afraid to see how bad it is, it’s time to push past that fear. You will never be able to dig yourself out of your hole if you don’t know how deep it is. You can’t change past decisions that put you in this situation, but you can change how you respond moving forward.

You need to know exactly how much money you have coming and exactly how much is going out. Here are the things you need to assess.

Categorize your expenses.  Take out a blank piece of paper and write down your monthly income; the amount that actually gets deposited after taxes and deductions.

Next, write down ALL of your expenses. Everything you spend money on every month.  Don’t leave anything out; even if it’s only $5 or $10, write it down. Make sure to list all of your debt payments as well.   If you’re not sure what they all are, look at your bank statements for the last 2 months. This will give you a good idea of where your money is going.

Once you have everything written down, it’s time to organize it. Organize your expenses into these 3 categories:  Debt, Regular Monthly Bills, and Variable Expenses.

Debt: Record all the debts that you need to pay off, even if you are not currently making payments.

Regular Monthly Bills: List the bills you have to pay every month. For example, mortgage, utilities, and cell phone bills. These bills are usually the same amount every month and need to be paid at the same time every month.

Variable Expenses: These are the expenses that change from month-to-month, like how much gas you put in your car, food, clothes, household supplies, beauty expenses, and entertainment.

When you have all income and expenses listed, add up all of your monthly expenses and subtract that amount from your monthly income. If you are behind on bills, don’t worry about saving money right now. You can eventually add saving to your budget but right now you need to focus on getting caught up.

Identify the bills you’re behind on.  These need to be your first priority. If you are starting a budget when you’re behind, it’s important that you don’t fall even further behind. For each bill you’re behind on, list the amount that you’re behind.  By doing this, you get a clear picture of your current financial situation.


Most of the time, creditors are willing to work with you if you are willing to make an effort to get caught up. Call your creditors and explain your situation.  Ask if there are any available options for you. I know this might be scary or embarrassing, but you are not the only one in this situation.

Remember to be kind, no matter how frustrated you might be.  It’s easier to get what you want if the person on the other end of the phone likes you. Be courteous and respectful and speak with confidence.

Always ask for more than what you want so there is room to negotiate.  If your goal is to set up a monthly payment of $100 to get caught up, start by asking for $75. That will give your creditor a chance to come back with their offer and work with you to stay within what you can manage.

If the person you reach tells you they are not in a position to negotiate, that’s their job.  Ask to speak to someone higher than them and don’t stop until you reach someone who is in a position to work with you.


Now you’ll be able to see your spending habits by reviewing the budget you created. There are probably some categories that you can cut back on. Do you have an expensive coffee habit that you can cut back on? It’s important to recognize your weaknesses and keep those in your mind as you are working on your new budget.


You will need extra funds to pay your past due bill payments. You can either cut your expenses or make extra income.

Take a look at your Variable Expenses and look for ways to cut down costs. Look at some of your fixed expenses and see if there is a way to reduce them.  For instance, cancel channels you don’t watch with the cable company or downgrade your cell phone service.


The next step is to look for ways to make extra income. Getting another job may not be the right answer is it disrupts the family. Earning extra money is important, but so is spending time with your family. It’s important to keep your spirits up and to maintain a healthy mindset.

Keep your eyes open for opportunities to make some extra cash. Sell the stuff you no longer use on Ebay or Craigslist or learn how to start an online business in your spare time.  Opportunities are everywhere if you just look.


It’s important to keep your budget updated so you don’t overspend. Add in the negotiated extra payments you made with your creditors to get caught up.  Review your budget monthly to make sure you are still on track.

About the author


Hey Everyone! My name is Alea, and I'm the owner of Everyone Loves Couponing! I started this site to help people learn how to save a TON of money and 3 years later, we're still going strong! Looking forward to helping YOU save a ton of money as well!

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