Hit a rough patch? Smart ways to make ends meet

Written by
Geoff Williams
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Hitting a rough spot financially could tempt you to whip out your credit card or apply for a new one. Those might be good ideas, or they may not be. For some people, applying for a credit card when you are low on money may be just what your banker would prescribe, and for others, it may be like dousing a fire with gasoline.

But one thing is for sure – if you are in a financial jam, there’s a right way and a wrong way to try to make your dollars stretch. In that spirit, we’re going to offer up some helpful suggestions on how to make ends meet when you’re struggling – and some suggestions on what not to do. So the first thing you can consider.

Should you use credit cards to make ends meet?

Yes, your first line of defense in a financial jam is often going to be your credit cards. If you’re in good financial shape for the long run and you simply have a cash-flow problem lating for a few days or a couple of weeks, then credit cards are a perfectly fine option to consider to stay on top of your financial situation.

In fact, it’s one of the main reasons people have credit cards, to fill in the gaps when cash is low. That, and there are numerous other benefits, such as: using credit cards responsibly can help improve a credit score, and if you pay off your credit cards every month, you can actually save money on all of your purchases by getting cash back, points or miles, if your credit card offers rewards.

REMEMBER: Credit card interest can accumulate quickly and add to your financial woes. Only use credit cards to cover a gap if that gap is relatively small and you have every reason to believe you’ll be back to paying your cards off in full every month very soon. In fact, if you otherwise have solid credit and a strong, reliable plan for getting back on your feet very soon, you could consider applying for a card with an intro 0% APR period on purchases to help you cover the gap while avoiding interest.

“OK, sure. But I’m in a real financial mess. Using my credit cards to help me get through a bad patch isn’t an option right now. So I need some other ideas.

Talk to your creditors and service providers

A first step if you’re having trouble paying your bills is to simply ask for help. Talk to your lender or service provider, whether that’s your electric company or cell phone company or mortgage or auto lender, and tell them you’re having trouble making payments.

If money is tight, and you don’t feel like you can or should fully rely on your credit cards, calling your lenders is one of the best ways to manage your cash flow and alleviate stress. It’s also probably one of the last strategies people employ, even though it should be first.

Remember, it isn’t like you’re the first person to call and say you currently have more cash going out this month than coming in and most lenders and service providers would prefer to work with you than simply not get paid. A few places to call…

  • Student loans. If you’re struggling to pay off student loans, ask your lender about getting a forbearance or deferment program (which are both plans that allow you to delay making payments for awhile).
  • Home and auto loans. If you’re having a tough time meeting obligations with an auto loan or home loan, chances are they, too, have a payment extension or financial hardship program that will allow you to put off a payment or two until another date. You want to use those programs sparingly. Often, interest will continue to accrue, and so these programs are just a Band-Aid to a financial problem, but sometimes a Band-Aid is all you need.
  • Medical bills. If you’re behind on medical bills, definitely call your medical care provider. They’ve seen it all and will generally work with anyone to come up with a payment plan.

What about calling my credit card issuer?

If you’re behind on payments, yes, absolutely call them up and tell them you are in a financial jam and see what can be worked out. But if you aren’t behind on payments yet, and you have available credit, and you mention that you’re financially struggling, you may find that your ability to use the credit card is curtailed.

Assess your lifestyle and cash flow opportunities

After talking to your creditors and service providers, it’s time to think about how to both handle the money you do have as well as opportunities to make more.

  • Look at your budget. If you’re in a financial spot because of living beyond your means, take this opportunity to rein in the spending and get your budget in order. If you’ve hit a tough spot due to a job loss or other outside-your-control issues, you’ll still want to take a hard look at your budget and adjust as much as possible so you can continue meeting obligations and taking care of yourself.
  • Ask for a raise. If you’re a solid employee with a track record of excellent performance, consider whether it’s time to ask for a raise. If it is, go into the conversation with a full list of reasons you feel you should qualify for better compensation.
  • Host a yard sale. Yes, they’re a lot of work to set up, but they’re a cost-free (or nearly cost-free) way to bring in some extra cash. Most everyone has some “One person’s trash is another person’s treasure”- type items lying around the house.
  • Explore side hustle opportunities. These days there are myriad opportunities to bring in a little extra cash, from driving a rideshare to delivering food to completing TaskRabbit requests. Obviously, not everyone will have the availablity to do these things, particularly if you have childcare to consider, but it’s worth exploring the options.
  • Apply for unemployment. This is obviously an “if you’re eligible” recommedation, but don’t be afraid to tap into the unemployement program. It’s exists to help people make ends meet when they’re out of work due to certain circumstances outside their control.

What are the worst ways to make ends meet

Well, this is the part of the article where I was going to tell you what not to do. For instance, if you’re really in financial trouble, I would suggest that you don’t use your credit cards.

We already advised that credit cards can definitely help some people get out of a financial jam, they can put people into one, too.

Don’t lean too heavily on credit cards

To reiterate: If your cash shortfall is going to last two or three weeks, then pulling out the credit cards might be a reasonable idea. If, on the other hand, you’re going to be running low on money for the next three or four months, then whipping out the credit cards among the last things you want to do. Or at least you want to make it part of your financial plan and not your entire plan.

“When you’re in a serious financial position and struggling to pay bills, it is important to explore all of your options and make informed decisions,” says Giacomo Santangelo, a senior lecturer of economics at Fordham University in New York City.


You may think charging your morning bagel to your credit card – if you do not have the cash – is a good idea. However, with rising interest rates you may find yourself making payments on the breakfast you had [today] months from now.

Giacomo Santegelo,
Senior Lecturer in Economics
Fordham University

Credit cards can pull someone out of a debt crisis, or they can make your debt crisis worse. So think about what you’re about to do before rashly turning to your credit cards to help you out of a financial mess. Are you buying groceries with your credit card, and maybe getting some cash back, and using coupons? Or are you easing your stress by buying a new wardrobe? Be careful out there, is what we’re saying.

Another big credit card no-no: Cash advances.

Credit cards are amazing tools, but only if you use them responsibility and wisely. And cash advances are rarely good ideas. When you take out a credit card cash advance, unlike a regular credit card purchase (where you usually have about 30 days to pay it off interest-free), the interest starts compounding immediately. So even if you paid back your credit card the following day, you’d owe something in interest plus whatever cash advance fee the bank charges. So you’d only want to take out a credit card cash advance in a true emergency, and even then, you’ll want to think long and hard about whether you should do it.

Avoid Buy Now, Pay Later options

Buy Now, Pay Later payment plans seem like a great idea thorugh which you can drag out your payments for items over a lengthy period of time without applying for a new credit card. Unfortunately, it’s also easy to lose track of payments as well as how many items you’re in the Buy Now, Pay Later pipeline with.

We aren’t saying people should never do BNPL. It can be a perfectly reasonable way to stretch a payment, generally over six weeks’ time, interest-free. But if you do that often, you’re continually paying for merchandise you’ve already bought, and possibly just making your finances tighter down the road.

Buy Now, Pay Later purchases also generally have fewer protections than credit card payments. For instance, you can easily return an item you’ve purchased with a credit card and receive a refund. It can be harder with a Buy Now, Pay Later setup.

As the federal government’s Consumer Protection Financial Bureau puts it, with a BNPL item, “While you may be able to return the merchandise, and you may eventually receive a credit, your loan repayment agreement may require you to continue to make payments while you are returning or disputing a purchase until your return or dispute is resolved.”

Again, do what you have to do, and if a Buy Now, Pay Later purchase works for you, more power to you. But it is best to use those types of purchases sparingly.

Beware pawn shops for quick cash

Pawn shop loans could leave you paying high interest and without a treasured item; they are never a good idea.

It’s true, with a pawn shop loan, you can usually get cash quickly, and your credit isn’t an issue. You do have to have something of value to pawn in order to get the loan. But if you have something value, do you want to lose it? Because you could.

The way pawn shops work is that if you don’t pay back your pawn shop loan, your item of value – your collateral – may be sold. In a sense, you’re gambling that you can make back the money you borrow – plus the interest, which is often high (sometimes 25% of the loan). As for the money you’ll get, you’ll usually get 25% to 60% of the item’s value. Yes, if you need the money badly, maybe your bet will pay off. But if you lose, you can lose big.

Watch out for payday loans, too

Payday lending stores are appealing for a few reasons.

The pros: Often no credit check, and you can get money pretty fast. At first glance, the fees look reasonable.

The cons: The fees are not reasonable.

Most two-week paydays loans charge around $15 for each $100 that you borrow. According to the Consumer Financial Protection Bureau, that comes to around an APR of 400%. Because you plan on paying back in two weeks and not a year, of course, you may see the 400% APR number as something to not worry about.

But payday lending stores assume that you won’t be able to pay back the loan in two weeks. They’ll allow you to roll over the loan and just pay back the interest. So imagine that you take out a loan for $500. You will now owe in two weeks $575 (again, this is a typical payday loan; some payday loans operate over a month’s time). If you desperately need $500 right now, paying $575 down the road may feel reasonable, and maybe it is, to you. But if you don’t have that $500 now, will you in two weeks, plus an extra $75?

In two weeks, you’re going to have other important bills to pay. Chances are, in two weeks, you’re paying back the payday loan store $75, and in two more weeks, you’ll try again to pay $575. And, sure, maybe you’ll eventually pay back $275, to whittle down that principal – and then in two weeks, you’d “only” have to pay $345, unless you’re struggling to pay that off, and maybe you’ll decide to need to actually borrow more…

Trust me: a payday lending store can be like debt quicksand.

FIRSTHAND ACCOUNT: During and in the aftermath of the Great Recession (2007-2009), I relied on payday loans quite a bit. I wish that wasn’t the case, but at the time, it seemed like my only option. I needed money fast, and so did my electric company. My credit score was in shambles, and I went into a payday loan store, and, well, I wound up the cycle of debt that everybody warns you about.

I was lucky in many ways. As a freelance writer, my income goes up and down, and at least when it went up, I was able to pay off what I owed. But I probably spent at least two years borrowing from the same payday loan store, paying the debt off, and then later, borrowing again. I can’t blame anybody for taking out a loan that way. For all of a payday loan store’s faults, it beats having your electric turned off. But it really is, as everybody says, a very expensive way to borrow money.

Geoff Williams,
ardRatings Contributor

Look to online personal loan lenders with caution

Some of them may be fine, but plenty really aren’t any different than a payday lending store, except that maybe you’ll borrow more and be in debt longer. The one saving grace with some of these online personal loan sites is that you don’t have to visit a brick-and-mortar payday lending store. You can go broke at your computer or on your phone, without the inconvenience of traveling somewhere to do it. Otherwise, many of them are often just as financially dangerous as a payday lender. Proceed at your own risk.

Stay away from rent-to-own stores

As bad as payday lending stores and online lenders can be, rent-to-own stores have the potential to be far worse. It can seem like a reasonable financial decision at first glance. Maybe you need a washing machine and dryer, and going to a laundromat isn’t easy or cheap. You have kids and maybe undependable transportation. It’s understandable why anybody would turn to a rent-to-own store, which allows you to buy furniture, appliances and so on, on a payment plan, typically with no credit check.

But by the time you finish paying for your washer and dryer or whatever you’re buying, typically you will have paid three to four times what you would pay in a store. You will feel wealthier in the short term, having a presumably nice, new appliance, but in the long run, you will be poorer.

“It may seem an obvious statement, however, it needs to be said: People should always avoid paying more than something is worth,” Santangelo advises.

What’s the worst thing I can do when I’m in a financial jam?

Auto title loans are among the worst things you can do when in a jam. If you are thinking about doing this, it’s time to declare that you’ve hit rock bottom before you actually do hit rock bottom. In other words, this is now the time to go to friends and family for a loan. Crowdsource for money. Sell your car, if you have to. You’d be better off doing that than getting money from an auto title lender.

If you’re thinking of taking out an auto title loan, as you probably know or can figure out, your car is the collateral for the loan. You’ll get fast cash, yes, and you may be able to borrow a lot – generally 25% to 50% of the value of your car – but if you can’t pay back the loan, as you would expect, you will lose the car.

A study that came out several years ago from the CFPB found that one out of five consumers were losing their cars to auto title lenders. The rest of the borrowers weren’t letting that happen, but that’s because most of them kept rolling over the loan, and just paying back the interest.

“So if I am utterly broke, and I don’t want to use my credit cards, and I decide to steer clear from payday lenders, online personal loan lenders and auto title loans, what’s left?

Santangelo suggests trying community resources that offer assistance, like your local food bank or other federal and national programs.

“While many people may shy away from such programs… they offer a path to get you back on track and avoid making your financial situation worse,” Santangelo says.

And that is the key thing any time your finances are in lousy shape. The last thing you need to do is to make a bad financial situation worse – and when you’re feeling panicky and desperate, that’s often the first thing we tend to do.

Geoff Williams
CardRatings Contributor

Geoff is a freelance journalist and has been since the 1990s. He specializes in personal finance and small business issues and has seen his work published with numerous news outlets including The Wall Street Journal, CNNMoney.com, Reuters, The Washington Post and Consumer Reports. He also...Read more

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