Q. I don’t earn enough to pay all my bills. I’ll either have to be late or skip payments for credit cards or student loans. Which is worse?
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A. Missing payments on any debt is a bad thing.

The best option if at all possible is to stay current on both, but you say your cash flow situation makes that difficult.

“You’re paying higher interest, most likely, on your credit card debt so it makes sense to pay the cards off as quickly as you can,” said Beverly Harzog, a consumer credit expert and bestselling author.

She said if you still have good credit, see if you can qualify for a balance transfer card with a zero percent introductory rate. This will give you a chance to make payments without accruing interest for a year or so, she said.

But if this isn’t an option, call your credit card company and explain the situation and how you’d appreciate lower payments for a bit.

“Most card issuers have `hardship departments’ and they often work with cardholders who can’t pay the bills,” Harzog said. “You might get lower monthly payments. These programs often last for about a year.”

None of this means you should just let the student loan debt slide. Missing payments and being late can affect your credit score in a negative way, Harzog said.

“Call your lender and ask about getting some help,” she said. “Many federal student loans have programs that work with you if you can’t pay your bill on time. You might be able to get lower payments, for instance, with income-based programs.”

Before you fall behind, take a serious look at your budget and cut back any discretionary expenses. Then look to your current savings. While we hate to advise you to put retirement savings on hold, you first need to get a handle on your debt.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.

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