The most important thing to do if you’re in a situation where you can’t pay all your bills is to try your best to stay calm. Step by step is the way forward. Take a few deep breaths and try to develop a plan. Just about any plan is better than ignoring a problem or acting out of fear. Reach out to MMI, our financial counseling partner, for free, one-on-one problem-solving.  Here are some tips.

1. Make a list of all the bills you’re going to have due.

2. Look at your income and expenses.

How much money do you have to work with? Is there any place in your budget where you could cut back for a while to free up more money? Is there any way you could increase your income – overtime, odd jobs, things you haven’t used in over a year that you could sell on Facebook?

3. Mark which bills must be paid.

There are some bills that you need to pay if possible. Rent, heat, water, food, and electricity all absolutely must be paid because they cover a necessity for living. If you can’t pay one of these bills, reach out to your local community service or action agencies for assistance. 2-1-1 is an information network that you can access by phone (2-1-1) or online to learn about local resources.

While these bills must be paid, you should try to minimize their associated expenses. Try to use as little heat and electricity as possible. Keep your food costs minimum by not eating out, using your local food bank and buying canned or frozen if cheaper.

4. Look at which bills remaining will have the highest consequences for not paying.

After you’ve set aside money for all of your priority bills, look for other bills that would have high consequences if you did not pay. Generally, loans that have objects of high value attached to them, collateralized loans, are more important than those that don’t, unsecured loans. The risk of not paying your auto loan is that your car is repossessed and you no longer have a vehicle. The risk of not paying your credit card is that they eventually close your card and may send you to collections. Losing your car is likely much worse.

5. See if you can explain or negotiate.

Many creditors are willing to work with you if you call and explain the situation. They may have a Skip-a-Pay program, where for a small fee you can miss a monthly payment without consequence. They may be willing to take a lower payment this month. You don’t know until you ask.

6. Don’t let someone pressure you into making a poor decision.

Something to keep in mind is that the creditor making the most noise could be the last one you should pay. Don’t let someone aggressive or threatening talk you into making a choice that isn’t in your best interest. Try to be calm. If they’re having to resort to scaring you, it could be because they know that their debt is a low priority debt for you, and they might not get paid.