What would you do if a $1,000 expense that you weren’t anticipating suddenly arose? For instance, your dog tears their ACL playing fetch and needs surgery right away, or your kid’s permanent tooth gets knocked out in dodgeball and they need cosmetic treatment, or your formerly reliable car now needs a thousand dollar repair – how would you manage the unexpected bill? Many people need help paying bills especially when they are unexpected.
According to a poll conducted by The Associated Press-NORC Center for Public Affairs Research in May 2016, 66% of Americans would struggle to pay for a surprise $1,000 bill. Even more shocking was that 38% of families making $100,000 or more per year (the wealthiest 20% in America) reported that, they too, would have difficulty finding a spare $1,000 for an unexpected expense.
Steps To Take When You Need Help Paying Bills
If you don’t currently have an emergency fund and you’re a part of the two-thirds of Americans who would see an unforeseen $1,000 bill as a crisis instead of a mere inconvenience, there are several steps you can take to tackle the problem without racking up a ridiculous amount of debt:
Keep Calm and Negotiate Your Options
First things first: negotiate with your creditors. Call them up (email or website forms may take too long if you have a looming payment due date) and find out if the person, company, or organization that you owe money to is willing to negotiate the amount they billed you. If you feel you were unfairly overcharged for something, you can bring this up as a key argument but be sure to gather evidence before you make your pitch.
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If they weren’t willing to reduce the amount you owe after a series of negotiation attempts (you may have to contact more than one customer service representative to see if you can get farther with someone else), then your next step would be to ask if they’ll give you an extension on the payment deadline.
For example, the IRS offers some extensions and alternative payment options for tax bills that would cause “undue hardship;” you just have to fill out Form 1127 to see if you qualify. Credit card companies and other creditors may offer similar extensions depending on your circumstances, so it doesn’t hurt to ask!66% of Americans would struggle to pay for a surprise $1,000 bill. Click To Tweet
Temporarily Slash Your Spending
While you’re in the negotiating phase of dealing with your $1,000+ bill, you can also slash your spending to save money for when the bill is inevitably due. You can’t simply cancel all your subscriptions and eat ramen in the dark without air conditioning for a few months, but you can take reasonable steps to curtail your spending for a while until you pay off the bill.
There are plenty of realistic ways to reduce your monthly expenses, such as replacing your expensive cable service with Netflix, cutting out drinks and dining expenses for a while in favor of brown bag lunches, waiting an extra month or two for that visit to the hair salon or barber (or do it yourself), incorporate coupons into your shopping routine, and save money on utility bills by monitoring and reducing your usage.
Research Low-Interest Borrowing Options
Resorting to a credit card is probably one of the worst ways to pay off a hefty bill. If you’re already paying an average of 19-25% interest on your existing balance, imagine how much longer it will take to pay off (and how much more interest you’ll pay) if you add $1,000+ to the balance. Yikes, right? The only instance where this might work is if you have a sizeable paycheck coming in shortly after the due date of your bill and you’ll be able to pay off the balance before high interest rates pounce on it.
Don’t let a moment of panic blind you from better alternatives. Consider borrowing from peer-to-peer lending groups like Lending Club when you’re in a pinch (much lower interest rates than credit cards, with payoff periods ranging from 3-5 years in most cases). You can also see if your local credit union will extend you a personal loan or find better lending options even if you have bad credit. For significant debt burdens, you can also contact National Debt Relief to see what your repayment options might be.
As a last resort, you could try asking a family member if they will extend you a small loan. Tread carefully because money is often the number one source of conflict among social relationships, but if you have a pretty good existing relationship and some sort of contract or agreement worked out, then you can make it work.
Try Boosting Your Income with Temp Work
To double your efforts in both saving more money on existing expenses and earning more money on top of your regular income, consider approaching a temp agency for a job. A surprise bill is never fun to receive, but it’s great motivation to hustle for more money for a while.
If your current job hours are incompatible with the temp jobs offered to you, then you could sign up as a driver for rideshare companies like Lyft or Uber to make money in your free time. If driving people around for money doesn’t sound too great – or your car being in need of repairs to function is the reason you have this unanticipated bill in the first place – then check out the website Fiverr for any gig imaginable starting at $5 per service or product offered.
Unexpected expenses crop up all the time. If you’re part of the 66% of Americans who dread the prospect of trying to independently cover a $1,000+ bill, then use the above steps to wade your way out of a pool of debt. Once the bill is paid off, use your new frugal habits to create an emergency savings fund to cushion the blow if/when another bill surprises you in the future.
Did I miss any good tips when you need help paying bills? What do you do when you need help paying bills?