Dear Penny: I Was Out of Work for 5 Months. How Do I Catch Up on My Bills?

A woman looks over her bills on her coffee table.
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Dear Penny,

I lost my job mid-April. After applying to nearly 100 jobs and interviewing for more than a dozen positions, I’ve finally been hired. I’ll start working the last week of September.

My problem is that I’m behind on a lot of bills from being out of work for five months. I didn’t have much savings because I was focused on getting out of debt. I kept paying my bills on time through July, with the exception of two credit cards that I got a hardship agreement on. When the extra $600 a week for unemployment ended, I started getting behind on everything. 

I wasn’t able to pay September’s rent. My apartment complex keeps calling and leaving notices on my door. I won’t be able to pay on Oct. 1, because I won’t get paid until the 15th. I’m going to be two months behind on most of my bills when my first paycheck comes, and I’ll be earning slightly less than I was at my former job.

How do I catch up?

-Buried by Bills

Dear Buried,

You’ve just made it through what sounds like an exhausting job search. You feel buried right now, and that’s understandable. But you’ve already started to dig your way out.

Now you’re about to embark on another exhausting but necessary slog: When you’re behind on bills, you have to haggle with everyone you owe about how much you can realistically give them. In some cases, it may be nothing. You can only stretch a paycheck so far.

The problem with so many of the “relief” programs that have been offered is that they haven’t really provided relief. They’ve helped people temporarily avoid the pain by pushing back bills, but they haven’t forgiven a dime of what you owe.

Most Americans lived paycheck to paycheck even when times were good. How are you supposed to pay this month’s bills plus the last month or two’s bills unless you miraculously find a job that pays two or three times what you previously earned?

The first thing you need to do is plan for the paycheck you’ll soon be earning by making a bare-bones budget. That means you only budget for your basic necessities: food, health care, housing and utilities, plus transportation, assuming that you need it to get to work. While a traditional bare-bones budget stops there, I’d consider a basic internet and cellphone plan essential enough to include.

Every cent you have left over is a pool of money you’re going to use to play catch-up.

Ultimately, I’d prioritize catching up on rent above everything else. You’re probably protected by the eviction moratorium order recently issued by President Trump, which bans most evictions through the end of 2020. But the order explicitly states that rent isn’t forgiven and that interest and fees can continue to accrue, so you don’t want to risk losing your housing.

The next thing to do is talk to your apartment complex manager — and I get it. Apartment complexes are notoriously difficult to deal with.

But tell them exactly what you told me: You’re starting a new job and you’ll be able to make October’s rent, but it will be two weeks late. Make an offer for catching up on September’s rent: Could you afford to pay $100 extra out of each paycheck until it’s caught up? Or maybe you could tack on a little extra to each month’s rent?

Use the same approach for essential bills, like utilities and your car loan, if you have one. Millions of people are facing similar circumstances right now, so there’s a good chance they’d agree to a payment plan of some sort.

You don’t say whether your credit card hardship agreements are still in effect. If they aren’t or they’re ending soon, ask your bank if they’d be willing to extend it a little longer knowing that you’ll be earning a paycheck again soon. The goal here is to buy yourself a little extra time.

The reality is, though, that you may not be able to afford your credit card payments. And it pains me to say that because you were trying to get out of debt before you lost your job. Yes, your credit score will plummet if you don’t pay your credit cards. But it will be way easier to recover from bad credit than it will be to bounce back if you’re evicted or your car is repossessed.

None of this will be easy. But neither was applying for 100 jobs or sitting through a dozen interviews. The fact that you kept going is a sign of true grit — and that grit will get you through this, too.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to [email protected].