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Step 1
Cut all nonessential expenses immediately as soon as you become concerned you may not be able to pay off bills you have incurred. These nonessential items could include cell phones, cable television, gym memberships, etc. Eliminating any expenses that are not needed will help you reduce the amount of personal debt you incur while freeing up the necessary cash to pay your other monthly expenses.
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Step 2
Consider refinancing your mortgage or auto loans if the interest rates drop below your currently rates. Depending on the associated closing costs, you may be able to save some significant cash every month that can be used to pay off bills that come due during that month. Often times you can roll the closing cost amounts back into the principal of the loan and still have a lower monthly payment that will free up some money that can be used elsewhere.
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Step 3
Start selling items in your home that you no longer use or need to raise money that can pay off bills. Use sites like eBay or use traditional means such as garage sales to offload unused items. You would be amazed at how much money you can raise just by selling things you don't even use that just take up space in your home.
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Step 4
Cut back on your utility bills such as electric, water, and heating expenses to reduce your monthly costs. Any extra money saved by reducing these bills should be used to pay off bills that are past due or are soon to be due. You can save a lot of money each and every month just by reducing your dependency on natural resources like electricity, water, and natural gas.
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Step 5
Downsize your vehicle(s) or home to reduce your monthly costs - if feasible. If it makes sound financial sense to reduce expenses by downsizing, then strongly consider this as an option that will help to pay off bills. Remember, cash is very important in a recession - so consider cutting back anywhere you can.
