How To Budget When You Are Already Behind

how to budget when you're behind

There is no worse feeling than being behind on bills. Whether you’re bogged down with student loan payments, a mortgage that is drowning you, or insane credit card bills, there is hope. Before you keep reading, take a big deep breath. No really, do it. Maybe a few deep breaths for good measure! 

It is easy to feel depressed, worthless, or panicked if you are behind on your bills. But being in a tough financial spot can happen to anyone. Today I’m going to help you learn how to budget when you’re already behind on your bills. Because no one deserves to feel the way you’re feeling right now. 

Keep reading to learn exactly what you can do to pull yourself out of the cycle and get caught up. I’m not going to lie. It won’t be easy. But I KNOW you can do it. And in the end, the sacrifices will be worth it. 

You’ve got this! 

Step One: Assess Your Current Financial Situation 

financial strategy plan

Chances are, you want nothing more than to throw those past due letters in a pile and pretend this isn’t really happening to you. But the first step to getting your budget on track when you’re behind is to look at your overall financial picture. 

This means looking at credit cards, checks, utility bills, mortgage payments, automatic bank payments, everything. Make a list of all the creditors you owe and the amount owed. 

Once you know who you owe and how much, it is time to look at your income. This might include income from a regular W2 job or social security payments, as well as any freelance work you do or tips you may receive. 

Now that you know exactly who you owe money to and how much income you have coming in, you need to look at your current spending. 

Step 2: Analyze Your Current Spending

If you are behind on bills, it is no surprise that your current spending exceeds your income amount. The hard thing to figure out is why that is happening and what you can do about it. 

Your next job is to categorize your spending. Categorizing your current expenses will help you figure out what you absolutely must pay and where you might be able to cut back. There are 3 major groups to sort your expenses into. Debt, regular bills, and variable expenses. 

So, pull out your credit card and bank statements and start tracking. You’ll probably want to analyze at least 2-3 months of expenses to get the full picture.


If you are behind on bills, the goal with your debt should be to pay at least the minimum payment. Obviously, I want to help you get rid of your debt too. But that is for a later day. The first step when you’re already behind on bills is to stop the spiral.  

So, round up your statements for any debts you have including credit card bills, car payments, mortgage, any past due utilities, student loans, medical bills, and anything else you owe money on. 

Write down the total and minimum payments for each of these debts if you didn’t in step one. 

Regular Bills:

Next up is to figure out where else your money is going. To budget when you’re behind, you need to know what is happening to each and every dollar. Regular bills might include things like rent, car insurance, phone bill, cable, and so on. Anything that is roughly the same amount every month needs to be accounted for in this category. The more specific you can get, the better.  

Write down the monthly amounts for each of these expenses based on your past spending. If you expect your bill to increase in the future, don’t forget to note that. 

Variable Expenses:

Variable expenses are the worst! These are the buggers that always seem to catch you off guard when you least expect it. These expenses are also easy to put on a credit card (with those soul-sucking interest rates!). Variable expenses include things like gas, food, and utilities. They might also include unexpected costs like car repairs, home repairs, and the like. 

Obviously, unexpected expenses are…unexpected. But many of the variable expenses are a good place to try to cut back on. We’ll talk more about that later. For now, your job is simply, organization. 

If you’re feeling overwhelmed with all the tracking, you can grab a FREE Budget Starter Kit here. Having your financial picture organized is so SO important for catching up on your bills. You really need to write everything down if you have any hope of improving your finances. 

Step 3: Try To Decrease Your Spending 

impulse spending

I know, I know. Literally, everyone tells you to decrease your spending. Maybe you’ve already cut back as much as you can. But if you haven’t, decreasing your spending is a great way to get your budget back on track if you’re behind on bills. 

Can you decrease your food bill by cooking at home instead of eating out? Maybe you could forgo that upcoming haircut you REALLY think you need. Or perhaps you could lower your gas expenses by riding the bus or carpooling with a coworker who lives nearby. 

Other options for decreasing your spending include cutting the cord on cable, switching to a more affordable phone carrier, and reducing spending on entertainment and other “fun” things. This doesn’t mean you have to give up fun forever, but in the short term, drastic times call for drastic measures.  

I can’t tell you exactly what you can do to decrease your spending. But by looking at your now nicely organized finances, you’ll be able to see if there is any extra to cut. 

Once you have analyzed your spending, add up all the money you can save by cutting back. If your expenses versus income still aren’t adding up. Don’t freak out. There are still several things you can to do get back on track! 

Step 4: Increase Your Income  

There are a few options for increasing your income quickly. Keep reading for the top strategies to earn some extra money can get caught up on your bills faster. 

Side Hustles

Sometimes you cut all you can cut, and your bills are still crushing you. One option to deal with this is to increase your income. 

There are plenty of side hustle ideas out there that require little to no experience or specialized skills. 

You could pick up extra work by driving your car for a company like Lyft or Uber. Or you could work as a grocery shopper for Shipt or Instacart. Another option is delivering for Grub Hub or Door Dash. The great thing about all of these jobs is that they usually entail working after regular business hours. So even if you have a 9-5 job, you can make extra income with these options. 

If you have a bachelor’s degree and you love working with kids, you could teach English online. This is a popular side hustle that can help you earn some extra money fast. 

And if kids aren’t your jam (or you need a break from kids after taking care of your OWN), give pet sitting or dog walking a try. These side hustle ideas require little to no monetary investment and can help you earn money fast. 

There are also other long-term side hustles you can build such as freelance writing, blogging, proofreading, or editing. But often these have a longer start-up phase. They are great to help you get out of the paycheck-to-paycheck cycle and grow your wealth. But if you need money like yesterday, stick with something that pays right away. 

Sell Your Old Things

Another option for making money fast is to sell your old junk. You can host an online yard sale that can bring in several hundred dollars in a short amount of time. That money could make a difference between meeting your deadlines and having your bills go to collections. 

Kids’ items and clothes are great for this. They outgrow everything the day after you bought it for them, after all. And if you have bigger ticket items like electronics or old furniture, you could make even more. So, if you have things you no longer use or need, it is time to dust them off, post some pictures, and start getting more cash to cover your bills. 

Step 5: Speak with Creditors to Make a Payment Plan

man calling on phone How To Budget When You Are Already Behind

Even if you can make ends meet by cutting back on your spending and increasing your income, you need to talk with your creditors. They may be willing to work with you to reduce your monthly payments or interest rate. Another option they may offer is to take the overdue amount and divide it up over a longer period of time.

Even calling utility companies could get you a reduced rate on your regular bills. When you are behind on bills, every penny counts. 

You may feel embarrassed at having to call your creditors. But you know what is even more embarrassing? Having your car repossessed, your electricity shut off, your house foreclosed on, you get the idea. So, even though you probably have absolutely no desire to speak with creditors, your future self will thank you! 

And don’t even sweat it. Because they probably get calls like this all the time. Remember, you are not the only person experiencing financial hardship, no matter how alone you may feel right now. People hate asking for help, but if you’re behind on your bills, help is exactly what you need. 

Another tip when speaking with creditors is to try to remain calm. Kindness can go a long way to getting you what you want. So, explain the situation, and try to keep a level head. Even though on the inside you might just want to explode. 

Step 6: Prioritize Payments

If you are trying to budget when you are behind on bills, there may come a point where you have to prioritize payments. You’ll need to do this if you cut expenses, increased your income, and talked to your creditors but still can’t catch up. 

Payments that should get priority are food and shelter. So, your mortgage or rent, utilities, and enough food to keep you going should be top of your list for paying. 

If things are really dire, however, you could consider taking care of food by visiting a local food shelf for support. That can help cut down on a necessary expenditure. Remember, desperate times call for desperate measures. And just because you need help now, doesn’t mean this will be your situation forever. 

Once you have prioritized food and shelter, consider which payments would be the worst to miss. Next on the list to prioritize is probably insurance. You need health insurance and car insurance or you risk going into even more debt. Plus, if you drive your car without insurance, you could face criminal penalties. 

After that, you’ll need to pick and choose which bills to pay. This could depend on what your creditors said when you spoke on the phone. Pay the bills most likely to be sent to collections first. This will help salvage your credit score, which can have long-lasting financial impacts. 

Step 7: Put Any Savings on Hold  

save home How To Budget When You Are Already Behind

If you are behind on your bills, your savings can wait. Put any emergency fund savings on hold. After all, you are literally in an emergency right now. You should also stop any retirement contributions. I know it may feel awful to miss out on “free money” from an employer match. Or you might feel like you are skimping out on your future. 

But when you can’t pay your bills, saving can wait until you get back on your feet. This brings me to the next step. 

Step 8: Make a Plan to Get Caught Up

Once you have done all the above steps, it is time to get caught up. And then, to make sure this doesn’t happen again. Even after paying off your past due bills, you’ll still need to continue with some serious money management in order to get ahead. 

Part of getting caught up is to avoid spending more on credit. I repeat, avoid credit cards at ALL COSTS! It is going to be extremely tempting to put more purchases on a credit card. But given the horrific interest rates credit cards have, this is a recipe for a deeper and deeper hole. 

Step 9: Update Your Budget

update your budget

Updating your budget goes hand in hand with making a plan to get caught up. You should have already developed a revamped budget to get back on track. But once you are out of the hole, you are not out of danger. Although unexpected life events and emergencies can cause significant financial damage, so can not budgeting. 

Budgeting may not seem necessary or fun, but it is arguably THE most important part of financial success. So, if you are behind on bills because of rolling credit card balances and living paycheck to paycheck, you need an updated budget. 

Once you are caught back up on your bills, it is important to plan for saving first. Finance experts everywhere stress the importance of “paying yourself first”. This means you determine how much money you are going to save each month. Then, the money that is left over is used for spending. Not the other way around. 

Paying yourself first is a critical step to getting ahead. This might mean you have to maintain your trimmed down budget or keep that extra job. And although those things might not be fun, I can guarantee they aren’t as bad as getting behind on your bills over and over and over again. 

The Bottom Line for Budgeting When You’re Behind

If you’ve made it this far, you should feel proud of yourself for making the decision to invest in your financial future. Not only will your finances be better off, but so will your mental health. Money doesn’t buy happiness, but it sure does “buy” peace of mind. And even though it doesn’t feel like it now, you CAN get to a better place financially. 

If you are behind on your bills, getting organized and making a plan is something you can’t afford not to do. You need to know what you owe (and to who), where your money is going, and how much is coming in to cover the costs. 

Chances are, you’re going to have to make some major sacrifices to get out of the hole and stop the paycheck-to-paycheck cycle. But these sacrifices will definitely pay off in the long run. 

And once your financial situation starts to look up, don’t stop! Use your momentum to keep budgeting and saving so you don’t find yourself right back where you are now. And most important of all, believe in yourself. Because I know I believe in you!