Find and Fix Your Money Trouble Areas

Most people never set a real personal budget and stick to it. The biggest reason is it requires some time and effort, but the payback is enormous over time. With the COVID crisis, more people are struggling and it can be due to losing a job, bad spending habits, divorces, sudden medical bills, and so on.

Here are some typical budgeting problems that many people struggle with and some potential solutions to them.

Cash Flow Problems

First of all, it is not just you. Most people do not know that businesses fail due to cash flow issues frequently, even very large businesses.

If you get paid weekly you end up short to pay the “big” bills that often occur in the first week: rent or mortgage, utility bills, car payments, etc. If you get paid once a month it is the same issue reversed, you are okay early in the month but are short later in the month depending on when you get paid. Either way, you keep ending up short early or late in the month.

Solutions:

• Plan your expenditures for every week of the month and try to move some of the larger expenses to different time periods to balance out the cash flow needs during the month. In weeks with less bills, set aside the money you will need in the following week(s), so you are not short when the time comes.
• You can use your savings account, yes you need to have one, and move money in and out as needed to meet the bills. Studies have found that there is less tendency to spend savings than a checking account.

Agreeing on the Budget

The single biggest reason for divorces is money issues or disagreements about money.

Solutions:

• When you first set up your budget, go through every major expense as well as the discretionary spending. You will need to compromise on some issues but agree to what you are going to do.
• If you ‘break’ the budget, sit down and go over what went wrong. Don’t assign blame but work on what happened and how it can be avoided going forward.
• Adjust the budget as needed e.g., you agreed to buy a new car, but you need to adjust your budget for the new payment, likely higher insurance costs, and any other costs that may increase/decrease.

Particular Problem Area(s)

You may find that there is one area you struggle with. Maybe it is buying new clothes too frequently.

Solutions:

• Set aside a fixed cash amount for the month for this area. When it is gone, there are no more purchases. Be sure you agree on this before implementing.
• If you stay below the budget limit, the remaining cash can be used for something fun, or a luxury spends of some sort.
• You may consider cuts in other spending categories depending on where you are struggling to control your spending. Look at everything!

You Spend more than You Make

When you set a budget and are thorough and review all income and expenses you may find you are outspending what your income allows for.

Solutions:

• You must cut all unnecessary spending. You may have been using credit cards to cover your hole every month but that is a habit you must break.
• Overcut not undercut when it comes to expenses. Why? There are always expenses no one planned for and they can ruin your hard work if you do not allow for them. It is better to have a little leftover at the end of the month than to be short.
• You may have to consider adding some income to offset your expenses. If you feel you cannot cut anymore, you have to look for side jobs or things you can do from home to generate income.

Too Much Debt

Almost every American has too much debt. A lot of it is in credit cards but you could also have student debt, loans to pay, etc.

Solutions:

• For credit cards, try paying off the smallest balance first and then take that card out of your wallet and put it in a safe place. Don’t close the account as that will hurt your credit scores. You may be able to do a balance transfer from one card to another that has lower interest rates and will be easier to pay off.
• Get professional help if you need it. Almost every community has free services to assist you in your budgeting problems and finances.

Unemployed

Certainly, during the pandemic, the number of people unemployed skyrocketed. If you are one of those then consider several possible actions.

Solutions:

• Cut ALL unnecessary expenses right away. Do not eat out. Cook using low-cost or generic ingredients. Cancel your cable and cut your phone usage so you can lower the service bill. Turn down your thermostat in winter a few degrees or the reverse in the summer. Sell things you are not using to generate some extra cash.
• If you have an emergency fund, you may have to use it.
• Your job hunt should be your job. This means you work at it. Don’t just fill out an app and call it a day. You will have a preferred job you want but be willing to take something that will get you paid and then keep looking.
• There are part-time jobs like grocery deliveries, Uber, etc., that can generate income right away as long as you have a reliable car of any kind. You can do 2-3 of these at the same time if they are scheduled correctly.

Losing Your House

Many people fell behind on home payments and did not act fast enough when they restarted work. Now they are at risk of losing their home.

Solutions:

• Call your lender! Many lenders will work with you, they don’t want to deal with taking over the property if they can avoid it. You will need to show them you have a budget and a plan and can make partial payments monthly or whatever it takes to keep your home. Your home payment should be one of your highest priority payments.

No matter your situation, some resources can assist you and many people have found solutions to their budgeting problems. And so can you!