Lacking the cash to pay your bills is a bad situation, but avoiding the problem is worse. If money is scarce and bills are coming due, don't panic. Gather your statements and a calculator, and go into planning mode. Tackle the crisis as a whole rather than dealing with issues as they arise, which raises the risk of making poor financial decisions that could affect you for years to come. As you pull yourself together, keep these five crucial steps in mind: Call the companies you owe: People faced with a budget shortfall will often try to avoid the companies they owe. They simply stop paying without giving a reason. But you should always call your creditors to alert them of your predicament. They might be willing to negotiate a compromise that would resolve the situation. Prioritize your bills: One of the biggest mistakes people make when money is short is to try to be "fair" when paying their bills. If they can only afford to pay one bill, they pay one this month and a different one next month. It might seem like a logical solution, but they could hurt their credit scores and anger the companies they owe. Some bills are more important than others. Prioritize your creditors and then pay them accordingly. Your mortgage lender should be at the top of the list. Conserve cash if you can't pay your mortgage: When people realize they can't afford their mortgage, they often put those funds toward other bills. They should save that cash instead. If you're falling behind and facing foreclosure, you'll need enough money to rent a new home. While foreclosures take months to complete, the previous owners usually have to move right away.