Desperate times call for desperate measures! Although over 5 million Canadians live below the poverty line, it’s a special kind of panic when you’re looking at a pile of bills with $3 to your name. When you need to keep yourself fed and not-evicted, it’s easy to turn to financially dangerous options such as payday loans. Although sometimes necessary, there are often other less risky routes you can try first! Here’s what you can do when you need last-minute money.
Before you look into borrowing money, it’s best to consider options that don’t add to your debt. Deep cleaning is my first suggestion because it’s a no-risk option. It’s also been a life-saver for me personally more times than I can count!
Essentially, I’m suggesting you sell your belongings. What you’re looking to sell comes down to how much money you need, and how desperately you need it. Regardless of what’s needed to pay your bills, though, selling a couple things around the house will definitely help. Although kijiji is a Canadian favourite, I usually prefer apps like letgo or decluttr.
Decluttr is better for smaller things, such as:
- CDs or DVDs
- Video games or consoles
- Textbooks or books
- Old toys
Decluttr is a favorite because it’s usually a guaranteed payment. Simply scan the barcode into the mobile app and get an instant quote. Decluttr will send you a shipping label and a box if you don’t have one. Once you send out your sellables, you receive a Paypal deposit the next day! This app is ideal for speed, but items must be in good condition in order to be accepted.
If you have a bit more time, letgo can usually find buyers who are willing to offer more money. This is because most people with accounts on this app are more serious about finding things to buy! I usually get more offers and messages on letgo than I would on kijiji.
I recently sold my mini-fridge on letgo for $100! Since it was a gift (sorry mom), that’s a full $100 profit. Letgo is usually great for furniture, electronics, or appliances that you don’t need anymore. If you’re really trying to scrape together extra cash to pay your bills, try to keep in mind big-ticket items!
Negotiate (everywhere and anywhere!)
Negotiating is a slightly riskier option because you have no way of predicting the outcome. However, there’s also nothing to lose!
Negotiate with the people you owe money to
This is a good step to try, but be sure not to rely too heavily on the results. It could include landlords, debt-collectors, or even your phone or utilities company! If you owe money, these people would prefer delayed payment over no payment, so they will likely try to help you.
These negotiations should usually hope to achieve:
- Extra time to pay off bills and/or
- Bill reductions in the future.
If you have a history of paying on time or a long history of loyalty to one company, you might have some leeway. Landlords usually allow late rent, although this would include a late fee. This is often a steep interest fee-charging daily. Obviously, exponentially raising your bill so quickly is not ideal if you already can’t pay your bills.
This is where negotiating comes in! It doesn’t hurt to ask if they’d be willing to allow a week or two of an interest-free extension, or even if they’re willing to offer a lower interest rate.
When it comes to debt-collectors or services such as a phone plan or utilities, there’s a couple of options for those unable to keep up with their bills. Again, they’d rather less money over no money!
Call your phone company and explain your situation, asking if there are any current deals or plans that offer similar services for less money. Call your utility company and follow the same game plan. There’s often a plan change that can save you a few bucks a month! Ask your debt-collectors about repayment plans that offer smaller monthly payments, or even for a break on repayment if possible.
Student loan repayment assistance plans
If you’re experiencing financial hardship, you may be able to reduce your student loan payments, or even pause them altogether. There are repayment assistant plans in both the USA and Canada that vary from deferment to loan forgiveness. You can read about this in detail in How to Get Help Repaying Student Loans.
Negotiate with your boss
If you have a steady job, your boss might offer another option for last-minute money should you need it. If you can swallow your pride and explain the severity of your situation, your boss will likely try to help, especially if you’ve never asked for something like this before. Similar to negotiating with people you owe money to, loyalty and your level of commitment in the past will likely improve your chances of a positive outcome.
Consider asking for a raise, a bonus, or an advanced payment. Remember that increasing your income is much more efficient than attempting to decrease your expenses!
Borrow last-minute money
As long as you have a plan going in (and have preferably exhausted all your other options), there is no shame in borrowing money during rough times. But be sure to know which option is right for you and your specific financial situation! Here are some loan options for when you can’t pay your bills:
Securing a Line of Credit
Lines of credit are more forgiving than other loan options when it comes to interest rates and lengths of terms! Lines of credit typically range from $5,000 to $25,000 and are offered at most financial institutions. The limit offered to you specifically will come down to your credit score (which you can check for free with Borrowell), your financial standing, and whether or not you are willing to offer collateral. Expect to pay an interest rate between 6% and 12% on a line of credit.
Extra bonus: If you are a student, student lines of credit offer better rates than usual. You also do not need to begin repayment until after you graduate, nor does the interest begin to accumulate!
A Credit Card
Getting a credit card is a common option, but be sure to pick a good one! Like all credit, credit cards need dedication and self-restraint in order to be financially beneficial. Finding a low-interest credit card that offers rewards specific to your lifestyle is an essential step in one’s personal finance journey. Given the right card, this step could grant you a couple extra grand as you pay your bills this month.
If you don’t already have a credit card open, it’s probably easiest to start with your current financial institution. However, special offers or rewards could be too good to turn down! People often use many cards from various institutions in order to reap the most benefits possible.
Credit cards can take care of groceries and some bills right off the bat, but many bills can’t be paid with credit. If you are short on rent or other bills that require actual money and there’s room left on your card, consider taking a cash advance out. Cash advances should be paid off as soon as possible, though! The average interest rate for credit card cash advances in Canada is 23%.
How to stay on top of it
So your bills are paid, you’re fed, and you’re safe. But those of us who’ve been through this panic over whether or not we can pay our bills know how terrible and stressful the whole debacle is. So how do we avoid falling back into this situation in the future?
Set up an emergency fund
An emergency fund should always be your top priority when it comes to saving. If you haven’t set up an emergency fund yet, you should start. It can take as little as $20 to build a sufficient reserve to fall back on, in case your finances are too tight again in the future.
Dipping into your own emergency fund when I can’t pay my bills does leave me with a tinge of guilt, granted. However, it’s much less guilt than I would feel pulling out another loan!
Pay off your debt
Debt is an income depressant. This means that staying on top of your finances is infinitely harder when you have to worry about debt payments and interest fees on top of it. It also means that you have much less room for in your budget than you would if you were debt-free.
This step is especially important if you used one of the loan options in order to dig yourself out of your rut. Although it’s more important to keep yourself housed and fed than it is to stay out of debt, paying off debt should still be high up on your list of financial priorities.
Once your finances become slightly more stable and your belly is full, make a debt repayment plan. Check out the free tool Undebt.it to help you plan and visualize your debt repayment journey. We did a full review on this great app here: Undebt.it Review – The Best FREE App To Help You Get Out of Debt.
There is solidarity in poverty. I personally have probably been in a similar position to yours. It sucks, but staying positive in the midst of financial hardship is possible. The only thing that can get you out of this hole is commitment, hard work, and time. But with this mindset and a plan for the betterment of your finances, the future is bright!