Sunday, February 22, 2009
The boom has been lowered, the axe has fallen, the pink slip has landed on your desk.
No matter how grim your financial situation may be, you can’t just ignore your bills and creditors. Prompt action is crucial: Let your creditors know you are having difficulties before you begin missing payments.
Financial experts say that when money is tight, you must prioritize what bills need paying first.
Ask yourself what expenses affect your family’s health and security the most.
* Making the house or rental payment, paying for utilities, buying groceries and paying the car note take priority. Don’t forget to stretch your food dollars by visiting the local food pantry for staples and applying for food stamps.
* Medical expenses, such as monthly prescription drugs, come next. Check with the local health agency, like Waco’s own Potter’s Vessel Ministries, which offers a medication assistance program for those down on their luck.
Also, Waco Family Health Clinic, 1600 Providence Drive, is hosting the “Help is Here Express” from 10 a.m. to noon Monday to aid uninsured Central Texans in determining if they’re eligible for helping paying for prescriptions.
Don’t be tempted to let medical insurance slide when you’re unemployed: If anyone in your family becomes ill, uninsured medical costs could be devastating.
* Pay the vital utilities, such as electricity, sewer, water or gas. Cancel the cable, and get your Internet access from the public library. If you have a cell phone, cancel the land line.
If things are especially dire, let some utilities slide — most electric or gas companies have low late fees and it generally takes at least 90 days before service is actually shut off. But know that re-connection costs can be prohibitively expensive.
Always contact the providers early in your unemployment to explain the hardship. Many utilities offer assistance or special payment plans for those in financial need.
* Pay the car note and auto insurance. You need wheels, of course, to find work. And some lenders will start repossession after only one missed payment.
* Pay child support, alimony and income taxes. Allowing these to slide can lead to property seizures and jail time.
* Pay student loans. The federal government backs student loans, and if you go into default it can take collection actions that other creditors can’t.
* Lower priority debts include credit cards, loans secured by household objects, personal loans and store charge cards. Pay the minimums on all these if you can, but if you have to choose between your credit card bill or the rent, keep the roof over your head. Again, ask your creditors for deferment for a few months until you are working again or for temporarily lowered minimums.
Linda Russell, a McLennan County extension agent for the Texas AgriLife Extension Service, said she urges consumers to take the initiative to contact creditors, especially in writing, to negotiate a lower interest rate, a lower monthly payment or even just paying the interest on the outstanding balance for a few months until landing a job.
Because of the economic climate, she added, she is in the process of creating a community course, “Managing Money in Tough Times.”
* Protect your credit rating as long as you can by paying all your bills on time. Many employers request that you allow them to view a credit history as part of the application process.
* Medical bills offer a bit more leniency than most other kinds of loans. Even if they end up on your credit report, they are generally looked at with more compassion than other missed payments.
National Consumer Law Center’s Guide to Surviving Debt, BankRate.com, Association of Independent Consumer Credit Counseling Agencies, HomeMoneyHelp.com