You’ll frequently hear me say (or read me write) that the math of a budget and personal finance is pretty finite. The formula is always:
INCOME – SAVINGS – EXPENSES = 0
When that math doesn’t work, something has to change. Situations like these are when you need to either make radical changes on your own or seek professional counsel. For example, depending on what the bill is, we can work to adjust payment amounts for a while or maybe move due dates (if the money is there, just not at certain times during the month). Depending on what the bill is, maybe it can even go away for a while (or permanently, depending on some possibilities). Then you also need to look at the income – both the amount and source(s). That way you can safely discuss extra income possibilities. That’s what it will really all boil down to. If you need professional guidance, you can contact me for an appointment and I’ll walk you through some options.
If you decide to go it alone, focus on the three areas you can control on your finances:
Everyone assumes the key to succeeding financially is to make more money. While it sure is easier to get out a financial mess with more money, our government has proven time and time again throwing money at a problem won’t make it go away. You should always seek to maximize income, but be reasonable. In the short term, maybe it is worth it to take on an extra job or sell some things. But don’t think this is your best long term strategy. Work life balance and your family are much more important than earning a huge salary.
In the short term (and only during a very focused season), I’m okay with you turning off savings for anything except critical items (emergency fund, car that is about to die, existing pregnancy, etc.). Saving is critically important, but don’t decide immediately that saving less or saving nothing at all is the right…or wrong…decision. Adjusting this one element may help you balance your budget.
This is the easiest to adjust. You can decrease expenses much faster and more easily than you can increase income. You are also not risking as much as if you were to cut out or reduce savings. This is the first place I ask people to look when they want to improve their financial well being. Look at every expense and ask two questions: 1) is it necessary? 2) can/should it go away or be reduced?
If the expense is absolutely necessary, keep it…but see if you can reduce it. If the expense isn’t necessary, I strongly urge you to consider getting rid of it, at least temporarily. If you owe more than you make each month, you’re in desperate times. Don’t be foolish by hanging on to some silly subscription or other expense “just because” you’ve always had it. Take a good hard look at every penny that leaves your household and be sure it should be leaving!