This One Move Can Buy You Time When Bills Start Piling Up
Struggling with bills? You’re not alone. Almost a quarter of Americans live paycheck to paycheck, according to a Bank of America report.
But that may offer little comfort when you’re feeling financial pressure. There is room for optimism, though. When bills start piling up — or even before — there are steps you can take to get back on track.
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The biggest one? Ask for a new payment arrangement with your creditors or service providers. Here’s how that might look and how it can help you.
Ask for a New Payment Arrangement
A payment arrangement is basically just a new payment plan. These are usually short-term agreements that extend your payment due date so you have a little more time to come up with the funds. Sometimes, the new arrangement will come with temporarily waived fees or lower interest rates.
“If you are already behind and late on bills, call the companies and set up payment arrangements,” said Russell Moran, owner at Russell Moran Enterprises, Inc. “Most companies want their money and will take it paid out. Some will actually negotiate terms and lower their fees or discount you for hardship. It never [hurts] to pick up the phone and call.”
Say you’re behind on your phone bill, or that you’re concerned you’re about to be. Service companies like AT&T will often let you set up a new payment arrangement online — assuming you’re eligible. By doing this, you can keep your service running while giving yourself a little more time.
If you don’t see an online option with your service provider or creditor, call them up and explain your situation. They might be willing to work with you.
Know that this option can also work with credit card issuers, especially if you have a good working relationship with them. If you’re falling behind on your credit card payments, tell them what’s going on and how much you can reasonably afford to pay. You might also have better odds of temporarily suspending or delaying payments if you explain when you’ll be able to resume normal payments.
While you’re setting up new payment arrangements, ask your service provider or card issuer if they’ll reverse late fees or penalty APRs. These can both add up if you’re not careful.
Credit card late fees are typically about $8, while penalty APRs may be on par with your normal APR (if not higher). The quicker you reach out to your card issuer about reversing these fees, the better.
Know Your Options (and Act Quickly)
Financial hardship can feel overwhelming, but you may have other options at your disposal. If you haven’t fallen behind yet, but you’re concerned your income isn’t keeping up with your expenses, the first step is to switch to something less expensive.
“I would shop around [for] everything you can,” Moran said. “I literally did this last night. I have been an AT&T wireless customer since 2000. Last night I shopped at Mint Mobile, and when I told AT&T what I was doing, they brought me from $190 a month for 3 lines to $120 for 4 lines. I was prepared to switch, but they matched Mint.”
Besides your phone plan, you can also shop around for different insurance and utility providers. Depending on your credit and income, you may also be able to refinance existing loans (like a mortgage) for a lower monthly payment.
And know this: Time itself is a valuable financial resource. If the bills are piling up, those payment plans can buy you a little more time. But don’t be idle. Use that time to:
Reevaluate your budget (and maybe lower your expenses a little)
See about picking up a side gig or a few extra hours at work
Ask for a payment advance (but only if you’re prepared for a lower future paycheck)
Consider local or government resources that can provide short-term, temporary financial relief (USA.gov is a good place to start)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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