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A while ago, I wrote about how I don’t make enough money to pay my bills. And though technically true, I do make enough money annually to cover all my expenses and we have a sizeable savings fund set up in case we need it to pay for anything. After writing that post, I have gotten a lot of search traffic directed toward that post, with many people desperate for answers on what to do when there’s not enough money at the end of the month. There are a lot of options when this happens, but if you ever find yourself in this situation, here are the first 3 steps you need to take:
Take A Deep Breath
Stop going through your pile of bills, step away from the table, take a deep breath, and realize that you can do this. Yes, you don’t have enough money to pay for everything. Yes, it may feel a bit overwhelming trying to juggle everything that is on your plate. But your life is not ending, you still have your life and your family, and you have options. You are working hard to try and make ends meet, and you should be proud that you aren’t giving up!
The worst thing you can do at a time like this is to psych yourself out and start to panic. You need to step back and take a long look at where you are and where you came from. Zoom out and look at the 10,000 ft. view of your life. You will see that this month’s finances are not the end of you, and that you are able to formulate a plan to work on getting out of this mess. If you have trouble calming down or feeling overwhelmed, make sure to call a friend or family member that you know cares about you and just have them listen to you. Talking it out is a GREAT way to get out of your own head and spell everything out in black and white.
Write Out Your Spending
This is taking a page straight out of my budgeting basics series, but you need to track your income and expenses to see how much you are bringing in, and find out where all of your money is going. If you don’t know where your money is going, then you will never know if you make enough money to cover your expenses or not. Go through the past 2 months of credit card and bank statement and write everything down on paper.
Once you have written it all down, total it in categories such as “food”, “toiletries”, “household”, and whatever bills you have. You can then see how much you are spending in each category, and decide places where you can cut down some spending. Bills are usually fixed, but all of your discretionary spending categories (i.e. “Food”, “Miscellaneous”, etc.) can usually be pulled back if needed. Usually after these steps, you can identify enough extra spending to cut out that you are able to afford your lifestyle again. If not, it’s time to cut even more (see below).
Take Care Of Family First, Drop The Rest
When you are faced with a situation that you are enable to cut any more spending and you still don’t have enough money per month to pay for everything, then you need to start cutting even more. First, you must take care of yourself and your family. This means you have to have money for food, clothing, shelter and utilities. Dave Ramsey likes to call these “the four walls” of your home. After that money is budgeted for, you look at how much money is left, and start allocating that money toward other bills.
Start with any government bills such as student loans or backed taxes. Then, put your money toward any obligations, such as car loans and credit card bills. And here’s the kicker; If you run out of money in your budget, you DON’T PAY THESE BILLS! I know it seems counter-intuitive, but if you have to choose between feeding your family and your student loan debt, FEED YOUR FAMILY FIRST!. The debt will be there when you start making more money, but you must take care of your family now. If collectors start calling and demanding money, just tell them you made a budget, and they fell “below the line”, and you have no money for them.
Yes, this is stressful. Yes, this will be tough. But you DO have options, and no matter who is demanding your money, you are in control if you get on a budget and start telling your money where to go. Don’t let anyone change your priorities for you.
If you need any direct budget help, please contact me using my Contact form.