Creating a Cushion
Many families have little or no financial cushion - 43 percent of Ohioans have no savings to cover emergencies, and many of those make more than $50,000 a year, according to the Corporation for Enterprise Development. They're living one hiccup away from financial disaster. A larger-than-expected utility bill, a flat tire, or a job loss or injury can push them over the edge.
If you are one of the 43 percent, what do you do if you know you just won't be able to pay every single bill?
"You've got to prioritize," said Cara Hill, central Ohio division manager for the financial counseling firm Apprisen. The first priorities should be housing, utilities, food and medicine.
When it comes to housing, homeowners have a lot more options should money come up short. Mortgage companies have an incentive to keep borrowers in their homes and out of default, and can sometimes refer you to financial counseling services, modify the loan or grant a forbearance. "The key is to give them a heads-up as soon as you know you will be late. The earlier you contact them, the more likely they are to work with you," Hill said.
If you're renting, you might have some lenience from the landlord, but typically options are more limited, because their only incentive is to keep the rent checks coming. You might be eligible for emergency assistance via social service programs.
Next up are utilities, "which doesn't mean Internet and cable," Hill said. "You have to have the lights and water on, especially if you have elderly or children at home."
Call the utility company. "They can assess usage, check for leaks and make sure there are no billing mistakes," Hill said. They can also set up a budget plan or repayment plan to ease the financial strain. Also, call early and often if you can't pay "because they will have documentation of your financial struggle and your desire to pay."
They might also be able to refer you to emergency assistance programs that can help with the bills if you're facing cutoff. "If you don't reach out, no one can really help you," Hill said.
When it comes to food, "create a plan, with three meals a week you can cook then stretch out over a few days," Hill said. Buy bulk packs of meat and supplies, rather than odds and ends. Seek out the local food pantry, as well as farmers' markets "where you can get healthy foods at low costs."
Medicine is a bit trickier. Check with your doctor, hospital and drug manufacturer to see if you can get samples. "Ask the manufacturer for a discount," Hill said. Check with the Ohio Department of Job and Family Services and websites such as NeedyMeds.org or the Partnership for Prescription Assistance Program at PPARX.org.
"It takes work," Hill said, "but help is out there. It's not long-term, but might get you through."
If you're juggling bills for more than two months, it's time to seek free financial counseling. Contact the National Foundation for Credit Counseling to find an agency in your area.
"You'll meet with an unbiased certified financial counselor, they'll take a detailed look at what you're making and spending," and help you come up with a plan to break the cycle, Hill said. They can also link you to community resources for help.
It's just as important not to dig the hole deeper by seeking a quick fix such as a payday loan or title loan. "It's harder to get out of financial distress once you've taken that kind of loan," Hill said. It's also essential to try to identify the root cause of the shortage if it's not as obvious as a job loss or disability.
"It might require self-reflection and you might need to make changes, like taking on another job or more efficiently managing what you do have," Hill added. "If it keeps happening, it's your warning that you have to do something differently."