It took a lot of courage (and my best friend holding my hand), but I finally opened everything in the huge pile of bills I kept next to my bed. And now I don’t know why I was afraid! I feel so much better now! (read: so if you have a similar pile, you too will feel better once you open it) This is not to say that these envelopes contained very nice messages, but now that I know what the messages say, I have the power to do something about them.
My best friend/roommate went through a similar situation as me a couple years ago, so she walked me though her early steps in getting back on track financially: The Bill Binder, which I originally called “the Binder of Doom,” until roomie pointed out that it was NOT a binder of doom, it was a Binder of Hope, because getting these off my plate was the only way out.
– 3 Ring Binder (mine is green, like money)
– Tabbed binder dividers
– a hole puncher
– A pen
Step 1: Open ALL of your bills! It’s ok! There is probably less than 1% chance of you dying while you do this, and if you did, it would probably have nothing to do with the bills at all. (Death by papercut?)
Step 2: Divide the bills into piles, however it makes sense to you, but I did it by medical bills, taxes, parking tickets, etc. If there is more than 1 notice for the same bill, keep all of them. On the subsequent notices, write “2nd Notice, ” “3rd Notice,” etc.
Step 3: make your tabs, you can customize them to a certain point, depending on your bills, but this is how mine goes:
- Due Immediately- In here you put everything that is past due, or is urgent, that cannot be put on a payment plan.
- Payment Plan- It contains bills that may be past due, but are from doctors offices etc. Most of these places will work with your financial difficulties. Call each of the places you received a bill from and see if you can break the bills up into something more managable for you. I had 3 places to call, and all of them agreed to the payment plan.
- Questions/Call: Didn’t I pay this already? Do I really owe this? Can I actually afford this service I’m paying for right now? Call them. You may find you have 1 (or more!) less payment to worry about, because someone screwed up. You might be able to freeze the service for a bit while you get back on your feet, or, sometimes, you just have to cancel. Is it absolutely essential? Ask these people about your options. Could they do a payment plan? Could they extend your due date? You don’t know unless you call!
- Tickets and Court Fees– I have several tickets for having an expired registration and inspection sticker. I have the inspection done, but I cant afford to pay the tickets, which means my registration can’t be updated. This is pretty urgent, and to me, warranted its own tab
Customize yours as needed, but I highly recommend “Due Immediately” and “Payment Plan” tabs.
Step 4: 3 hole punch your bills and put them in their respective place. Try to keep everything together in pockets or with paperclips.
Step 5: Create a budget for your next paycheck that includes the payment of a couple of these bills. I’ve chosen to pay off lenders and people who have loaned me money first. (have you seen how much interest you pay on loans when you have bad credit?!?!) Be realistic, don’t forget to feed yourself. It’s ok to budget in a little fun (Halloween is coming up!)
Pay Day 10/17: $1200
Food ( 2 wks): -$ 80
Gas (2 wks): -$60
Metro (10 Days) -$120
Total after necessities: $940
Credit Card: -$25
1/2 Phone Bill: -$50
Loan Payment: -$400
Car Payment: -$240
Pay back Brother: -$200
Gas Bill: -$40
Speeding Ticket: -$40
Misc. Money: $125
So I have $125 left over for 2 weeks. In that, Halloween needs to be included. I already have my costume and need a wig, we will say that I’m willing to spend $20 on a wig. That leaves me with $105. $105 to eat out, drink (during Halloween week…), shop. When you only have 105, do you really need that $5 coffee? Or could you get a bag from the store for $5, wake up a bit earlier, and brew coffee for yourself for the 2 weeks between paydays? You can’t be as lazy, you have to plan meals you can make in advance, make grocery lists, keep in mind any dinner plans with friends and budget for them. Wouldn’t it suck to have to cancel, because you just HAD to go to Sonic for lunch and now you can’t afford a nice dinner catching up with friends? I recommend doing this budget sheet a only few days before you get paid, you’ll have an accurate depiction of what will be happining in your life on pay day. You can do it in advance too, but you may have to change it several times for it to be accurate, as unexpected things may pop up, and mistakes might be made, especially in the beginning.
I’ve been a seriously bad example of this thus far, doing whatever I want, overdrawing on purpose to afford my life, ignoring bills. It might feel better in the moment, but at the end of the day, I was a mess. Waking up in the middle of the night worrying about money, hitting the ignore button on my phone for bill collectors, that is no way to live.
The way we spend our money is a habit, we just have to change it into good habits. And maybe, someday, when you have less bills to worry about, and more of your income goes into that “Miscellaneous” category, you can afford more of the things you want.