Lynnae McCoy is a freelance writer, homeschooling mom, and frugal living enthusiast. She writes about frugal living at Being Frugal.net and about balancing work and homeschooling at Freelance Homeschool Mom. When she has a rare spare moment, you can find her on Twitter.
You’ve finally taken the time to set up a budget. You’ve written down your income in one column. You’ve listed your expenses in another column. You’ve compared the two columns, and there’s a glaring problem: your expenses are greater than your income. Now what?
Take Another Look at Your Expenses
It’s time to take a hard look at your expenses. The truth of the matter is you can’t afford to have everything on your expense list. Make two columns. One column is for necessary expenses and the other is for unnecessary expenses.
You need a place to live, but you don’t need cable TV. Enough food to keep you healthy is necessary, but a restaurant meal every other night is not. Do you really need both a landline and a cell phone?
Once you’ve listed your expenses in columns, prioritize the unnecessary expenses. Keep cutting the lowest priority expenses until your budget balances. If you can make it balance, congratulations! You’re finished.
If your budget still doesn’t balance, you have more work to do.
Take Another Look at Your Income
By this point, you know you don’t have enough income to meet your necessary expenses, so you need to stop the budget bleed. Is there any way you can increase your income enough to meet your expenses? Perhaps it’s time to start looking for a better job. If you have a lot of credit card debt, maybe you just need a part-time evening job until you can get your debts paid off. Alternatively, you could also sell things around the house to cover your debt.
When your budget imbalance is small or is due to a short-term problem, such as too much debt, finding an extra source of income is often enough to balance the budget. But what if it’s not?
It’s Time to Make Some Hard Choices
If you’ve cut your budget to the bare bones, tried every possible way to increase your income, and your budget still doesn’t balance, you have some hard choices to make.
You need a place to live, but is your current home too expensive for your budget? You need to consider moving to a less expensive home if your income can’t support your current living arrangements.
If your debt payments are way too high, you need to contact your creditors and be honest about your situation. You may even need to contact Consumer Credit Services for advice.
It can be difficult to deal with a budget that won’t balance, but facing the problem head on will insure you get back on sure financial footing as soon as possible.