First, you’ll want to figure out why you are behind on your payments. Did you forget a payment or two, so now you have to catch up? Did you budget incorrectly, so you didn’t save enough money to make your payment? Did you lose your job? Did your mortgage payment increase, so now you can’t afford it? The reason may be another one, but broadly speaking, you are probably dealing with either poor planning, not enough money, or a combination of the two.
It can be tough to plan for monthly payments, if this is new to you. School doesn’t teach you how to manage your money. It often comes down to figuring it out as you go along. So, a pretty simple way to plan for your payments is to create a basic budget. First, make two columns on a piece of paper or on your computer. On one side, write down all the money you will make in the next month. Add that up. On the other side, write down all the bills you have to pay, like your mortgage, water, electric, phone, insurance, and television. Don’t include things like groceries, going out to eat, movies, etc. Add up the expenses you have to pay. Compare the two numbers. Do you have more money coming in than you are paying out? Great! If not, you’ll have to look at ways to cut your expenses, like changing phone plans or dropping television. If that doesn’t work, you are in a spot where you cannot afford your mortgage. More on that later.
So, back to having more money coming in, the amount you show has to cover everything else in your month, like groceries, emergencies, copayments, and gas. If the amount you have left over isn’t close to covering those items, you also have to figure out ways to cut expenses.
If you have enough money to cover your month, you now have a basic budget. You know how much you have coming in, how much you have to pay out, and how much you have to work with to pay for other expenses, like your groceries. That third number is the one you will adjust your life around and closely monitor throughout the month.
However, all the money doesn’t come in and go out on the first day of the month. You must plan for when things happen. Now it’s time for a calendar. First, mark the days when you get paid and the amounts. Next, mark the days you owe money and the amount. Now comes the more confusing part. For each day of the month, you write the running total. For example, on day 1, say you start with $500. You don’t have a bill until the 5th, so on the 1st, 2nd, 3rd, and 4th, your running total is $500. On day 5, your $70 bill is due, so your running total is now $430. Carry that forward until your next bill or payday.
The idea is to get a picture of how much you have available on any given day and see what you end up with at the end of the month. That tells you what you can actually spend on a day and when you can really afford to spend it. For example, if you have a payday of $500, but you have bills leading up to the next payday that use all but $75, you only have $75 to spend between paydays, even though some of the early days will show higher numbers. This lets you plan for when to shop for groceries and pay other bills. It also lets you know how much you can spend. You should do this for several months forward to really get an idea of where and when money is coming in and leaving.