You might think being in debt is somebody else’s fault – but you’re probably wrong.

The other day I had the television on for background noise and overheard a commercial saying something like, “You’re in debt and it isn’t your fault.”  Nothing grinds my gears more than people not taking responsibility for their own actions unless it’s a company encouraging people to avoid responsibility for their own actions. Now, I do understand there are unique situations where large amounts of debt could be incurred through no fault of your own, so let’s exclude those situations from this conversation.  The main two that fit the bill are medical debt incurred due to an unexpected accident or serious illness/disability, and somebody else committing fraud in your name. Both of these situations need to be handled in a very different manner than debt that is incurred through conscious decisions and actions. Many of us have plenty of income to provide for our families, but we’re still struggling for a variety of reasons. We don’t think we can afford a vacation, we don’t do things that we love due to lack of money and we feel financially and emotionally stressed much of the time.  Or, we do take vacations and do things that we want but we are using credit cards to pay that are not paid in full every month. A 2017 study showed that nearly 80% of U.S. households live paycheck to paycheck.  That is a staggering number, and pretty scary. How many people in the 80% group are one disaster away from bankruptcy?

What can we do?

It’s obvious that something in our budgeting methodology needs to change, but what?  Do we need to start eating Ramen noodles for dinner every night and stealing toilet paper from public restrooms to save money?  Downgrade living arrangements and set up shop in a camper? Uh, no. None of these ideas are necessary and wouldn’t be sustainable anyway.  Much like extreme diets, extreme budgets just don’t work. Nobody can stick with long term deprivation when there are other options. So what do we do?  Well, just like a popular 12 step program, the first step is to admit there is a problem.  If we never take charge of the situation, it will never get better, and will most likely get worse.  I want to help you.  I know how awful it is to feel like your financial situation is out of control.  I’ve been there, I’ve felt it. Here’s my suggestion: Go completely old school and get out a piece of paper and a pen and write down some information.  If you really prefer, you can do this on your computer or phone, but there’s something about being able to touch and feel this list that makes it feel official and real.  List your monthly income – how much do you bring home? Now for the painful part, list your outgoing expenses; everything that occurs each month.  This is what I will call the discovery phase. During this discovery phase, it is a good idea to track your spending for a week to get a realistic idea of how much money you need each week to live.

Now what?

Take a look at this information once it is compiled and answer some questions.  Do you have enough income to cover your current outgoing expenses and leave enough left over each week to realistically live?  If not, you will need to make some changes to get to this point. Do you have enough income to cover the essential items for your family? Here is a list of what I consider the essential items:

  1. Food
  2. Rent/Mortgage
  3. Transportation expenses (if you own a vehicle; gas, maintenance, reasonable payment)
  4. Utilities; water, gas, electricity, basic phone, (not cable, not internet)
  5. Insurance
  6. Childcare (if applicable)

If your income does not allow you to afford the essentials listed above, you have an income problem and not a budget problem.  You can read the rest of this information for future use, but your first priority is to generate more income. Any other type of debt is probably already taking a backseat if you don’t have enough money to eat, provide a place to live or get to a job. If you can afford the essentials and you are struggling with covering the rest of your outgoing expenses, guess what? You have overextended yourself financially. Notice who did that? You! And who can fix it? You! This may seem like an overwhelming task, but it can be done and you will feel so much better once you have a plan in place.  I know, because I’ve been here. I have overspent, I have racked up credit card debt, I have bounced checks, I’ve done it all.

And then?

Just writing out your monthly incoming and outgoing financials is a great first step!  Do you see areas where you can make immediate changes? Do you have subscriptions or memberships that you don’t use that could be cancelled?  (I constantly battle a certain 5 year old in my house who goes in and out of wanting to watch a science documentary channel on Amazon that costs $4.99/month.  He watches one shark show and then he’s over it!) Are you spending more than you thought on groceries? Groceries are often the biggest struggle in my budget in terms of keeping expenses under control. Stay tuned for the next steps, big things are coming soon.  In the meantime, become familiar with your finances and track your spending for a week. Send me a note and let me know what things you have discovered by taking a closer look at your budget.  You can reach me on FacebookInstagram or email.