6 Steps To Take If Your Fixed Expenses Are More Than Your Paycheck
Written by
Cindy Lamothe
Edited by
Ashleigh Ray
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Finding yourself in a situation where your fixed expenses are more than your paycheck is exceptionally difficult to navigate. However, according to experts, it isn’t impossible with the right strategies.
Taking steps to cut nonessentials out of your budget can help you have more money left over for those non-negotiable expenses, said Ann Martin, director of operations of CreditDonkey.
“If you’re still coming up short, consider taking on a part-time side gig to help ease your financial burden.”
Below are more expert-recommended steps you should take when you find yourself strapped for cash.
Reduce Your Expenses Immediately
CEO of CoinLedger, David Kemmerer recommends starting by bringing down your fixed expenses in any way you can.
“I would highly recommend reaching out to utilities, internet and more, and try to negotiate for lower monthly rates,” Kemmerer suggested.
He equally recommends canceling any subscription services or recurring payments and creating a strict grocery budget and meal plan.
“Ultimately, my long-term recommendation here would be to begin working on strengthening your credentials to make more money,” said Kemmerer, “but in the short term, it’s important to bring those expenses down to where you can manage them on your current paycheck.”
Similarly, Ashley Vincent, owner of Home Investors, said you should reduce expenses by scrutinizing your spending habits to see where you might be able to trim the fat.
Like Kemmerer, Vincent recommended canceling subscriptions and negotiating for lower rates on your bills.
“And don’t forget to explore cheaper alternatives for things you regularly spend on, without sacrificing your quality of life,” she added. “These small adjustments can add up and make a big difference in balancing your budget.”
Negotiate Your Monthly Bills
Another strategy, according to Marty Burbank, attorney and owner of OC Elder Law, involves negotiating with creditors or seeking alternative payment plans for debts.
“Many are not aware, but companies and lenders are often willing to work with individuals to adjust payment schedules, particularly if they’re proactive and communicate their financial hardships early on,” said Burbank.
“In my practice, I’ve advised clients on how to approach these negotiations, ensuring they maintain their credit standing while managing their cash flow more effectively.”
Consider Consolidating Your Debts
Debt consolidation might be another avenue worth exploring, recommended Burbank, especially if high-interest debts are part of the financial strain.
“By consolidating these into a single, lower-interest loan, the monthly payments can decrease significantly,” he said.
However, Burbank added that it’s crucial to consult with a financial advisor before proceeding with this option to ensure it aligns with your long-term financial goals.
“In my sessions at the Southern California Institute, I’ve covered case studies where debt consolidation provided the breathing room needed to reorganize finances effectively.”
Find Ways To Increase Your Income
According to Burbank, increasing income should always be part of the conversation.
“Whether it’s seeking employment with a higher salary, taking on a part-time job, or turning a hobby into a side hustle, the additional income can make a substantial difference,” he said.
Throughout his career, Burbank has seen “the impact of creative income solutions on individuals’ ability to manage and eventually overcome financial difficulties. It underscores the importance of a multifaceted approach in tackling financial challenges.”
Hit Pause on Your Savings
Harrison Tang, co-founder of Spokeo, emphasized pausing your savings for the moment if your expenses are more than your paycheck.
“This is only true if your expenses include needs and not wants,” he added. “You should temporarily stop saving and try to meet your expenses fully. Otherwise, you may go into debt or look for loans to meet your expenses.”
Doing this will buy you time to get your finances in order. “My advice would be to either keep the existing job and find a side hustle or look for a new job,” said Tang.
Consider Relocating to Somewhere More Affordable
If you live in an expensive city like New York, Tang suggested trying to find a place in the suburbs.
“This will reduce your expenses and may allow you to limit your spending,” said Tang.
While relocating is a big decision, the long-term savings in your overall cost of living could be worth it.
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