Tips for Budgeting when Income Doesn’t Meet Expenses

Are you more than $2000 in debt?

Then this Article is for you…..

Debt is not a bad thing. I know that must sound funny in an article like this. Most of us who have suffered under the burden of excessive debt will find it hard to believe that debt can be anything other than a death sentence. I remember days when I would unplug my telephone because the creditors were calling so often I just couldn’t face it anymore. That was in the days when creditors could be a lot meaner than they can now. So how is it that I can say that debt is not a bad thing? Well, in this article and those that follow, I am going to share with you the “A – B – C’s ” of getting out of debt. The goal of this article is to do more than tell you to go to the library instead of Border’s for your books, or to make your coffee at home instead of going to Starbucks, it’s intent is to “teach you how to fish” instead of just handing you a guppy. So what are my “A – B – C’s”?

A- Attitude

B- Budget

C – Consistency

Let’s face it, most of us got into this mess by being a little unrealistic about what we could and could not afford. So having an appropriate attitude towards debt and finance is the only thing that will help us making “LASTING” changes in our budget. The goal here is not just to pay off one or two bills, but to clear our debts, and build the foundation toward creating personal wealth. Without the right attitude it wont make a lick of difference what budgeting tool you use. You will fall back into debt again. I guarantee it.


Patch the holes-
If you have any credit cards(this includes debit cards or any other check cards)-cut them up right now. Go to the drawer and pick up the scissors and cut them up. All of them. If you are not willing to do this I suggest you go do something more productive with your time. This article is for those who are willing to hurt a little now so that they can be better off in the long run. Reliance on credit cards is the single worst contributor to over spending your budget. Trust me. It hurts, but it helps.

Think like a winner-
If you want success you have to do things that will breed success. So invest some money, and more importantly some time, into either reading or researching how you are going to get yourself out of this mess. Remember your budget is more than numbers in an accountant’s ledger. Those numbers represent the sum of all of your actions and personal beliefs on spending. Your goal is really to unlearn what is perhaps life time of bad habits, some that are passed on from generation to generation. This is very powerful stuff. So treat it as such. Read books like “As a man thinketh”, “Rich Dad Poor Dad”, and “The Richest Man in Babylon.”
One person that helped me immensely was Suze Orman. She has a show on MSNBC. She tells people like it is. At this point in your efforts to get out of debt a little tough love is absolutely the thing you need. Spending more than you earn is like a drug, and you need to ween yourself off of it. So please anticipate all the withdrawal effects you would expect from cutting yourself of any drug. But bare in mind, it passes, and all the bad habits you currently have will slowly fade into the good habits you need. I promise.

For Pete’s sake, you are not a professional, you have no idea how you got in this mess, so please don’t think you will be able sit down in one afternoon and lay out a budget that will get you out of it. You need a third party. A trusted friend, an accountant, or even a non profit credit couciling organization can help you with this. Take the time to be as bruttaly candid about your spending as you can. This “second” set of eyes will see options for you saving that you wont. They will not be as emotionally attached to canceling that magazine subscription as you are. And be thankful for that.

Envelope Budgeting-
Once a budget is set that effectively balances out your income and expenses to zero (Remember that is the goal, if you don’t reach that, YOU DO NOT HAVE A BUDGET!) You can do something that helped me . . . envelope budgeting. For every line item on your list, you should have a dollar amount for the month. Let say I am allowed to spend twenty dollars for cappuccinos. (You have of course made one for “RENT” I assume) Write “Cappuccino and $20” one on the one envelope. Every time you get paid, bring home the cash and put the exact amount in that envelope. That is your simple yet effective budget for that item. If you only have twenty dollars for cappuccinos and you overspend before next pay day, guess what? You ain’t got no more. It sucks, but you are learning how to be responsible with your money. If you really need to buy a cappuccino, go right ahead, but realize it has to come out of another envelope….

This is the hardest part of the budget. I call it “where the rubber meets the road”. This is where even the best financial adviser cannot help, because it is entirely up to you. You need to stick to the budget. And let me tell you something. You will fail. You will go to McDonald’s when you shouldn’t because you forgot to make lunch the night before. You will buy a round too many at the club because “you deserve a break.” So I don’t want you to go into this thinking that you will be perfect. No one is. So do not give up when you stray from the budget. Pick yourself up, read that book on debt and finance you bought, turn on Suze Orman. This is where the “A” of the “A – B – C’s” come into play. It’s a long road.

Remember that even when you get out of debt, you have to stay out of debt. But hopefully the journey will teach you that you have the ability to control your own destiny. A few bad mistakes and bad habits should not control your life forever. You have the potential to have the life you want. So please do not let anything stop you from achieving that end.

Debt is not a bad thing. The abuse of it is however. Make debt your friend and you will be in control of it, instead of it in control of you.