When you find your money is leaving your accounts faster than it’s coming in can be a scary thing indeed especially when most of those expenses are your everyday bills.
Finding a way around this problem is not easy but there are some things you can do to make the problem easier to manage or even disappear completely.
What should you do when your bills exceed your income?
The first thing you should do is write down everything you earn and everything have to pay for. Then you can see where you can make some cuts to your spending. The second thing you need to do is look for ways to make some extra money so you don’t fall further into debt.
Working from the simple equation of ‘money in – money out = spare money’ should always end up with a positive amount. If it doesn’t (negative amount) you need to do these things right away
- Tell your creditors
- Make a budget
- Make big cutbacks
- Earn more money – Make and sell crafts
- Sell unwanted items
- Ask family for help
- Consolidate your debts
By jumping on the problem right away will mean you are closer to fixing it and people will be helping you that much faster too.
Addressing the problem head-on will not only show your creditors you are serious but it will give you valuable lessons in dealing with problems, taking responsibility for your life, and managing stress.
You will feel better as a person for this and you will save money too. Hiding from the problem will only compound it.
Tell your creditors
It’s important to tell your creditors the minute you realize you have a problem, even if the problem is not yet here you should still tell them. They may be able to do something to stop you from getting into trouble before it happens.
If, however, it’s too late and you find yourself in this situation there may be some things you can do with your creditors to help you get by until things improve.
They may be able to offer you a discount, if you are paying for a fixed-term contract like cable or phones then they may be able to reduce the cost for a short term or even switch you to a cheaper plan without breaching your contract. In extreme situations, they may let you break the contract and cancel completely letting you off the hook for the rest of the future payments.
If you are making payments for cash debts then they may offer to freeze the payment for a while, freeze the interest or even negotiate a discounted final payment. This can help if you have some short-term cash you can get your hands on.
Often a discounted final settlement can save you hundreds but it does require you to pay a big chunk of your money upfront but it could leave you short elsewhere.
Make a budget
If you hadn’t started a budget before, now is the perfect time for you to begin. It’s easy if not fun and it will let you track down each and every incoming and outgoing bit of cash right down to the last cent.
Keeping an accurate track of everything is the only way you can get through this situation. Write a list of everything you need to spend money on from the rent/mortgage right down to the haircuts and coffee.
Having a budget will let you see exactly where the money is going, handy if you are not sure. It will also let you see patterns of spending so you can try and avoid them.
You may find that towards the end of your pay period when cash is very lean and you are feeling down you often go out for a coffee and danish to make yourself feel better.
A budget will show up spending like this so you can deal with it directly.
Make big cutbacks
Now you have your budget and have asked your creditors for discounts, leeway, or other assistance it’s now time for you to get your hands dirty.
Go through your budget and spending plan with a fine-tooth comb. Be ruthless. If you have cable, get rid of it, if you have an expensive mobile plan get a cheaper one. If you buy coffee every day then stop! (Or make it to go at home).
When the going is good you will find yourself spending more and more money, it’s only when times are tough that we really look at our spending and see where it all goes.
The next time you are going to grab a small treat, you may tell yourself it’s only $5 but if you did this 2 or 3 times a week that can add up to almost $75 a month. Now imagine you stopped and put that money towards a bill. How much easier would it be for you?
Spending more than you need to is a bad habit but it’s a habit, pure and simple. This is the good news. Habits can be broken and new habits can be formed. Repeating something as little as 20 times can break/create a habit. Stopping that coffee for a few weeks will be hard at first but after a week or so you won’t even notice.
Sell unwanted items
If all your efforts to cut back, reduce your spending, and ask your creditors don’t help then you may have some things that you don’t need or use that you can sell. A good rule of thumb is if you have not used it for more than 6 months it’s pretty safe you won’t in the next 6 so get rid of it.
You may be surprised at just how much you don’t actually need. (I now just have a backpack with around 8kg of personal possessions and have never felt freer)
Try looking at niche websites if you have unusual or rare items like comic books, jewelry, or such as trying to sell them on Craigslist or eBay will not give you a good price.
If you do have things that are indeed, of value you may want to try a local auction, you can put a minimum price on the item so if it doesn’t reach the price you want you just take it home, better than selling an item for peanuts.
Earn more money
This can be one of the easiest and fastest ways to get yourself out of your predicament. After all, if you suddenly start earning a little extra and take the money in / money out equation back into a positive figure then you will be fine, maybe not comfortable but you will not be slowly sinking further and further into your problem.
Often a small, part-time job can make the difference. I often used to get second or even third jobs when there was something I needed to do or if I had a problem that needed extra money to solve.
If you can’t find a job or other forms of paid work then you may want to try setting up something yourself for a few dollars a month. Check out my articles on how to do this easily below. They can give you a few ideas on what could be good for you and what’s not to avoid making your situation worse.
Which Business Is Best For Beginners? Hint- Crafting Blog
What Is The Easiest Business To Start? And What’s Not!
Small Craft Business From Home / Ideas and Considerations
Profitable Candle Making Business: Can I Do It? Spoiler:Yes!
The advantage of extra income is that it can build a safety net for you if something truly unexpected lands on your doorstep.
The big advantage of doing something for yourself is that nobody can take it away from you. You cannot be fired from your own business and you can decide how much money you want to make, there’s nobody refusing to give you a pay rise for working harder.
Ask family for help
If it’s not possible to get extra work, have your own business, or if it’s simply not what you want to do then you can ask your family to help you out.
Tough times call for tough measures but with the right family, you can always come together and help those who need it the most.
Getting help from family is usually the least objectionable of the options but it does come with risk. If your situation does not get better after their help you could risk having family issues too if money is a sensitive issue.
The advantages of family assistance can be numerous, interest and term free loans. Cash gifts or even other nonmonetary help like free dinners and free childminding so you can go out and work for a few hours here and there.
Whatever your situation family can usually provide you with some relief from your problem until you have a chance to fix it.
Consolidate your debts
Debt consolidation is another option but this one should really be your last resort as it can cost you more in the long run.
Usually, a debt consolidation company will work with you and go through your financials with a fine-tooth comb. They will make recommendations of where to cut back and budget and will speak with your creditors on your behalf.
This sounds great but it comes at a cost. While you may get some breathing space with a lower repayment plan, it will usually be for a long period of time and there will often be interest and administration fees added into the cost.
If you know your situation will improve in the future and you want some immediate relief and peace of mind then consolidation of your debts can be the way forward.
Conclusion
Not having money or even being in a situation where you are seeing yourself slowly sliding towards that pit of despair as your money drains away can be a nightmare.
Taking swift and immediate action can help you get a handle on the problem and with the right help, you can make this problem go away before it does irreparable damage to you and your loved ones.
Swallow your pride, ask for help and get it done. You will feel a thousand times better for having tackled it head-on rather than try and pretend it will go away on its own.
When you do get out of the situation you are now in, I recommend you stick to the budget and build a savings fund for emergencies. It will provide comfort knowing it’s there as well as being able to use it for an unexpected issue in the future.
Looking to make money from crafts?
Click here to learn how with our step-by-step guide showing you everything you need to know.