Can’t pay your bills this month? Here's what to do

We Canadians owe a ton of money — a collective $1.4 trillion of it in fact. It’s money we’ve spent at the mall, the car dealership, at the local pizzeria. Trying to keep up with all the payments can be pretty tough if you’ve overspent, or if you suddenly find yourself unemployed.

Having to face bill payments when you know you don't have the funds, can be stressful. But the worst thing you could do is shove those unpaid bills in a drawer and hope there’ll be money next month. Instead, take these steps to empower yourself and turn things around.

1. Don’t wait for the problem to go away

If you don’t have enough money to cover all your bills this month, don’t just avoid the stack of bills  and tell yourself you'll deal with it next month. Face the situation head on and make a plan to get back on track now.

2. Lay it all out

Take all your bills and lay them out in front of you. Write down how much money you owe on each bill (is there a minimum payment you can make?) and when the payment is due.

3. Figure out which to pay first

Now that you've figured out what needs to be paid, consider the consequences of missed payments for each one. If you miss a phone bill payment, you’ll likely rack up a late charge; miss a rent payment and your landlord could possibly use it against you in eviction proceedings. There’s also your credit score to consider — missing more than one credit card payment can affect your score and make it harder for you to get credit down the road. While missed utility bills aren’t reported to rating agencies, according to the Financial Consumer Agency of Canada.

4. Consider those interest rates

If you’re paying high interest rates on your debt, then you might want to consider moving those payments up the list. A credit card with a 19.5 percent interest rate is going to cost you big time if you miss payments. And those interest charges will make your bill harder to pay next month…and the month after that.

5. Pick up the phone

If there’s absolutely no way you can pay a particular bill on time, call up the company and explain what’s going on. A nice proactive phone call is a lot better than remaining silent. In the case of your mortgage, for example, your lender might be okay with you missing a payment, as long as they know when they can expect the next payment.

6. Do not avoid collection agencies

If you don’t pay your bills for awhile then pretty soon the company that lent you money might hire a collection agency to get the money back. If you’re getting calls from a collection agency make sure you don’t ignore them! Here’s a good article from the Globe and Mail that gives tips on how to talk to a collection agency.

7. Get better at budgeting

If you’re coming up short every month, it might be time to revisit (or make!) a budget to help you stay on top of your spending. Especially if you’ve had a change in your finances, such as a job loss or a big unexpected expense like a health crisis, then you need to adjust your budget to reflect your new reality a bit better.

8. Consider counselling

If it’s looking next to impossible to pay all your bills back, then you might want to consider credit counselling. That’s where you sit down with a credit counseling bureau to figure out how to pay your creditors back. They can lend you their expertise and help you get a grip on the problem with your creditors. Here’s some more on that topic to get you started.