Surviving Loss of Income

Loss of income can cause real problems in most households. Many families live paycheck-to-paycheck and any disruption in pay can create havoc on the family finances. At Consumer Credit Counseling Service of South Texas we’ve developed a ten step plan to help you deal with a reduction in income. This information can also be downloaded from our printed Loss of Income Brochure.

Step One: Analyze Income

Determining your exact income will help you when analyzing what is available for household expenses and debt payments.

Step Two: Create a Budget

Prepare a budget based on your past spending. Your budgeted expenses should include: fixed expenses (mortgage/rent, car payment, insurance, child support, etc.) and flexible expenses (food, utilities, gasoline, phone, clothes, etc.). Subtract the projected budget from income to determine what is available for any other obligations or debts.

Step Three: Prioritize

List items to be paid in order of importance. This will keep you focused on what to pay first if money is short. The most important is mortgage/rent followed by utilities and car payment. Child support or government debts are also a high priority unless other arrangements have been made.

Step Four: Notify Creditors Before Accounts Are Past Due

Make every effort to pay the required or minimum payment on your accounts. If you cannot determine how much you can pay offer your creditors this amount. It is best to contract them in writing. Letters should include an explanation of your situation and amount you can pay and when it will be paid. Other information to include is account number, phone number and address. Keep copies of the letters.

Step Five: Pay What You Can

Even if you can’t pay them what they want, pay what you as as often as you can. This shows your creditors that you are responsible and are making every effort possible. It may also prevent your account from being turned over to a collection agency.

Step Six: Stop Using Credit

Do not continue to charge on your accounts or see further credit until your normal income resumes. Continued charging may damage existing credit privileges, especially if accounts are delinquent and/or the creditor is accepting a reduced payment.

Step Seven: Keep in Touch With Creditors Regularly

Call or write often. This shows those you owe that you are a concerned, responsible customer. The level of communication you exhibit often determines the method and frequency of collection activity.

Step Eight: Cut Expenses

As income is reduced, so must your cut costs where ever possible. You can no longer afford to live as you did before. Have a cost cutting session with the family and implement those suggestions into your daily living.

Step Nine: Sell What You Don’t Need

Have a garage sale; sell that extra car or perhaps the boat and trailer. Analyze your assets to determine what could be sold, without really affecting your lifestyle.

Step Ten: Seek Help

There are a number of city, state and government employment programs and services available to the unemployed. Don’t be embarrassed about asking for assistance. For help with financial concerns contact CCCS of South Texas.