DebtHammer Newsletter #15: The Tools You Need to Become Debt-Free

It’s never too late — or too early — to start thinking about your financial health and get your finances in order. For many people, this means establishing a savings fund, paying off debt, or maxing out their investment account contributions.

But if you’re struggling to pay for everyday expenses or monthly bills, the idea of achieving any financial goals — short- or long-term — can be overwhelming. It can be even harder to get (or stay) motivated when you compare yourself to other people’s financial situations.

That’s why it’s important to start small and take your time to get from where you are now to where you want to be. After all, building up to a financially stable life is a marathon, not a sprint. With that in mind, here are some options to consider if you’re struggling to afford the bills — and what you can do in the long term.

What to do when you can’t afford to pay your bills

If you find yourself falling behind on bills or have trouble keeping track of expenses, you’re not alone. Roughly 46% of Americans consider themselves to be in a bad situation financially, according to Forbes. This is lower than what it was just over a year ago. And a DebtHammer survey from June found that almost half of Americans are skipping meals to make ends meet.

Even though it’s stressful, there are various local, state, and federal resources available to help if you can’t afford your bills. Here are just a few.

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Take advantage of state and federal programs

Around 11.6% of people live in poverty — that’s roughly 38 million people. The good news is that there are many federal and state-level programs to help people who can’t pay their bills or need extra assistance. These resources can help with things like rent or mortgage payments, utility bills, childcare costs, groceries, and healthcare expenses. Refer to your state’s government page or go to to see what’s available near you.

Go to a food bank or pantry

Food banks and food pantries are designed to help people who can’t afford food costs. They’re free and located throughout the United States. You can find a local food bank through Feeding America or similar organizations online. If you have a community garden or a backyard, you could also start growing your own food and save money on groceries that way.

When you go grocery shopping, plan what you’ll buy in advance. Make a list and stick to it. See if you can plan out your meals one or two weeks ahead of time to cut down on food waste and save more cash. And review your local stores’ weekly ads. Look for items you can build meals around that are on sale, and if you need to shop at a different store, see whether they’ll price match.

Speak to your creditors

If you’re falling behind on credit card or loan payments, or if you’re at risk of doing so, contact your creditors and explain your situation. They might be willing to help by offering a better repayment plan or letting you postpone payments for a month or two. They might also be able to reduce interest rates or waive certain fees. Some even have COVID-19 hardship exceptions still in place.

While you’re at it, check with your bank and credit card company to see if you’re spending money on any other fees — like account maintenance or annual fees. If you are, consider switching to a new financial institution or see if you can get these fees waived.

Speak to a credit counselor

A nonprofit credit counseling agency is a free or low-cost service that can help you with several areas of finance. For example, they could help you create a realistic budget or get a better handle on your debts (through a debt management plan). They might also be able to help you deal with your creditors or lenders.

Avoid “immediate” cash solutions

Financing options like credit cards, Buy Now, Pay Later plans, and no-credit-check loans (ex. payday loans) have their place. But they also tend to be expensive, leading to more financial problems than they solve. If possible, try to avoid these.

Consolidate your debts

If you have multiple debts and are struggling to keep track of your monthly payments, debt consolidation could be the solution. It rolls your loans into one larger loan, ideally with a lower interest rate, leaving you with one more manageable monthly payment.

READ MORE: How to consolidate debts

Refinance your loans

If you have a home loan or auto loan and a good credit score, you might be able to refinance. Doing this could save you money on interest rates. It might also lower your monthly payment amount, which could be helpful if you’re barely making ends meet. Use an online calculator to make sure refinancing your loan is the right option for you.

Use cashback and coupons

Many major debit cards, such as Discover, offer cash-back rewards when you use the card for everyday purchases. If yours doesn’t offer this, consider switching to a bank that does. That way, you’ll have a little extra money for the times when you need it.

You can also use coupons, discounts, and promo codes when shopping. If there’s a specific grocery store you frequent, see if they have an app that lets you automatically find and apply discounts to your grocery bill. Or if you prefer to shop online, install a free browser extension like Honey that will automatically search for the best deals for you. Check out gas programs to save money on fuel purchases.

READ MORE: Best gas reward and loyalty programs

Set aside small amounts

Any time you have some extra cash, whether it’s only a few quarters or $10, set it aside somewhere outside of easy reach. This could be in a savings account, or it could be in a cash envelope. When you need it — whether it’s for groceries or a higher-than-usual utility bill —, it’ll be there to help.

You could also do a money savings challenge, either alone or with a partner. These challenges can be a great way to start setting aside a little money, which will also add up over time and act as a cushion for when you need it.

One popular money savings challenge is the 52-week challenge. With this, you set aside a little money every week in an envelope. In week one, you only need to set aside $1. In week two, you save $2. In week three, you set aside $3, and so on. In the final week, you’ll save $52. By the end of the year, you’ll have $1,378.

READ MORE: How to start a budget from scratch

Go generic rather than brand-name

Generic or store-brand goods — from medications to food to clothes — tend to be cheaper than their brand-name counterparts. Unless you’re set on a specific brand, shop around for cheaper alternatives. If you do this with prescription medication, speak to your doctor first to make sure the generic option works for you.

In the same vein, consider shopping at secondhand or thrift stores for clothes and other household items. You could get high-quality items at a fraction of the price.

Get a side gig

Around 9% of adults in the U.S. are gig workers — a number that’s on the rise. With a side gig, like rideshare or delivery, you could earn a few extra hundred dollars a month. This could not only help if you’re struggling with debt, but it could also help get you back on your feet financially.

READ MORE: Best ways to find cash in a pinch

Tips to start improving your financial situation

Here are a few ways to start improving your financial situation now and in the future:

  • Create a budget. Your personal budget can — and should — change when your income, expenses, and/or financial goals do. But if you don’t have a budget in the first place, now’s a good time to create one. That way, you can get a better idea of how much you’re earning vs. how much you’re spending, and you can cut back where it makes sense.
  • Plan Around Your Wants and Needs. Sometimes, our eyes are bigger than our budgets. The next time you’re thinking about buying something, take a moment to think about whether it’s a “want” or a “need.” Simply put, a want is something you can live without — a need is not. If there’s something you aren’t sure about, leave it on the shelf (or in your online shopping cart) for a while before coming back to it. If you still feel like it’s a must-have, and if it fits into your budget, get it.
  • Contribute to an investment account. Even small contributions to a retirement or investment account can add up over time. This might mean setting aside just $20 a month. With a 7% return on investment, you could have around $1,432 after 5 years or $10,419 after 20 years. And if you increase your contributions over time, you could have much more than that.
  • Avoid taking on more debt. When you’re struggling financially, it can be tempting to use your credit card or a short-term loan (ex. payday loan or title loan) to help cover the bills. But while financing options like these have their place, they can end up costing you in the long run. Only take on new debt after carefully considering the pros and cons of doing so — and making sure you can reliably pay it back.
  • Use your federal tax return for your emergency savings fund. Not everyone gets a tax return, but if you do it can be a great way to start establishing an emergency fund. The average tax return in 2022 was $3,039 and, though it’s expected to decrease this year, any amount helps.
  • Set up automatic savings. Many banks and credit unions let you link your checking and savings accounts to avoid overdraft fees and allow for easier internal transfers. But some banks also have automatic savings features to help you save up more money without having to think about it. Try setting a personal savings goal so you have more money for later.
  • Invest in yourself. This might be something you have to wait on until your financial situation improves more, but investing in yourself could lead to solid returns. For example, you could return to college for an advanced degree to help with your future career prospects. This might involve taking out student loans, though, so be sure to calculate this in your decision.

Looking ahead: Planning for long-term financial success

Personal finance is tough. It can be especially tricky if you’re new to budgeting or don’t make enough money to cover your basic living expenses. But many free and low-cost resources are available to help you get back on track. Reach out to a credit counselor or check what options — from food banks to utility bill pay assistance — exist in your area.

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