Everyone runs into money troubles at some point. If you are a homeowner, however, those money problems can land you in foreclosure or, even worse, homeless. If you run into a situation where you are struggling to make your mortgage payment, take these steps to try to stay afloat while you sort everything out.
Get on a Budget and Cut Non-Essential Expenses
If you find yourself struggling to pay the bills, you are not alone. According to a 2013 survey, 76% of Americans are living paycheck to paycheck. While you are in good company, that doesn’t pay the mortgage.
If you are missing payments and bills, the first place to look is your monthly expenses. Most Americans don’t regularly budget or examine their expenses, but they should. And if you are having money problems, the need to budget and understand your expenses is much more urgent and important.
You may find surprises in your spending habits that you can change to fix the issue right away. Spending too much eating out, shopping, or on expensive cell phone and cable TV packages are common places to save when getting started.
Earn More on the Side
If you are on a budgeting and still can’t make ends meet, the next place to look is your income. If you can find a side gig that pays you a fair rate, you can build a sizable side income.
Popular options to earn on the side include driving for Uber or Lyft, freelance work online, or starting a service based business on evenings and weekends like lawn care, bookkeeping, computer repair, or home maintenance.
If you have a busy schedule and struggle to find free time, look at your biggest time wasters like watching TV (Netflix counts) or time dedicated to an expensive hobby. If you are in a relationship, you can tag team with your significant other to run the new side business, which can lead to a stronger relationship and better income.
Contact Your Bank Before Skipping a Mortgage Payment
Before you miss or skip a mortgage payment, your should reach out to your bank to discuss financial hardship options. Your bank may allow you to make interest-only payments for a short period, or offer other options to help you bridge the gap until you can get your finances back on track.
Of course, missing or skipping a payment may lead to credit score and credit report problems, so examine all other options before getting to this point. Since the Great Recession, some banks have created programs to help troubled borrowers, so look for those resources at your bank if you find yourself unable to pay.
Additional Resources for More Help
If you have already taken the steps above and are still struggling, here are some resources you may find useful to help you get back on track financially:
Dave Ramsey’s 7 Baby Steps – A basic personal finance training course by money guru Dave Ramsey.
CNN Money Essentials – A crash course in planning for your financial future from the famed news organization.