What do you do when your monthly bills add up to more than your monthly income? Do you use money from your line of credit to cover the extra costs? Do you put the additional expenses on your credit card? Or do you call your father and ask for some money, again? Now I know there are many people out there that are thinking, oh man I would never do any of those things. Using credit cards or a line of credit to supplement your monthly cash flow is simply ridiculous. What a crazy way to manage your money. And to those people I say: “I pray that you never find yourself in a position where you need to do that”. But for those of us that have been there, and done that, I want to share with you that you are not alone and that there is a better way to manage your money. You can overcome the issue of not having enough money at the end of the month. You can learn how to manage your money so that you’ll always have enough. This is how I suggest you get started.
Does This Sound Like You?
Last year at this time I kind of knew where my husband and I stood financially. I knew that we owed a lot of money to a variety of financial institutions and I knew that we were robbing Peter to pay Paul at the end of every month. I had a system and for some weird reason I was kind of proud of how well I juggled all of the payments and managed our money. I mean really, we never ever missed a payment. They were all on time. We each have our own credit cards and lines of credit, and we each have excellent credit ratings. What’s so bad about that, right?
By juggling all of the money around I thought I was just buying us time until we would one day be in a position to catch up. But when would that day come? Clearly I was delusional.
As January 2012 rolled around we finally admitted that our financial situation was a mess and that we couldn’t deal with the financial stress any longer. It was time to take action and we were ready.
Manage Your Money by Writing It All Down
First I gathered up all of our monthly bills, credit card, and line of credit statements. I opened an Excel spreadsheet and typed in all of the accounts, how much we owed each one, the monthly payment required and the interest rates. Then I hit sum total and almost fell out of my chair. Even though many things have happened over the past 6 years to get us to this point, and I did have a general idea of how much we owed, I didn’t know it was as high as it was.
Time to Follow a Budget
Since I had all of the statements in front of me, and Excel was open, what better time to start creating a budget.
After typing everything in, including our income, I could see exactly what was going on.
I included categories for expenses such as groceries, utilities, gas, cat food, insurance, and so on. I shared the budget with my husband and we discussed where we could cut back.
Instead of feeling upset about our situation, and the fact that we obviously needed to reduce our expenses, we chose to challenge ourselves to see how much less we could spend each month.
My husband phoned the utility company and put our account on a monthly budget plan. Cell phones are not an issue for us as we only use them for emergencies on a pay as you go plan. We got rid of our long distance plan on our landline. I decided that I would dye my own hair instead of paying a hairdresser $150 three times a year ($450) to do my hair. While individually these expenses do not sound like much, when you add them all up, it makes a big difference. And these were all expense that we paid in the past without putting much thought into it.
I won’t go into all of the details, but our budget became quite detailed and every receipt was added in each month.
What are you spending your money on? If you find that you are short on cash each month, take a look at every single thing you pay for and figure out what you can live without.
Seek Financial Advice on How to Manage Your Money
Even after we did all of the above we were still short of money at the end of the month. But at least now we had a very clear idea of what was going on. At least now we had something to work with.
However, deep down we were still very stressed out. We felt like failures. Can you relate?
It took a few months of tracking our expenses before we finally sought help. We met with several different financial counsellors to discuss our situation.
You see when you are dealing with financial trouble it is easy to let stress and your emotions cloud your judgement. You don’t think clearly and you begin to believe that your options are limited.
You start to lose your self confidence and self esteem, and when that happens, things typically get worse, instead of better.
And you may be of the belief that when you go to speak with a professional about your financial issues all they will do is reinforce the fact that you are a walking financial disaster.
But you know what? The exact opposite is true. The financial counsellors we spoke with were very positive, professional, easy-going people. They did not judge us, talk down to us, or add to our already feeling of worthlessness.
They listened to us and they treated us with care and respect, which made it very easy for us to be open with them, and share all the details of our financial situation, and how it came to be like that.
And the end result was that they taught us how to manage our money so that we would have some money left at the end of the month. We left feeling better than we had in a very long time.
My Suggestion to You on How to Manage Your Money
If you too are struggling to manage your money, and you feel like no matter what you do you never have enough, I suggest that you find a financial advisor or a credit counselor in your city that you can speak to face to face.
The beginning of a new year is the perfect time to take that step. Make some phone calls and setup appointments. Create your budget, either online or with pen, paper and a calculator. Be prepared for your meetings by taking a copy of your budget with you. My suggestion to you is that you take the first step right away. You will be so happy that you did.