7 Moves To Make Today If You’re Going Into Debt To Cover Expenses
Written by
Martin Dasko
Edited by
Rebekah Evans
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A study from Resume Now found that three in 10 people have taken on debt to cover basic living expenses just to get by. Due to the combination of the increased cost of basic necessities and slow wage growth, it’s clear that Americans are facing financial hardships. The report also shared that 12% of respondents couldn’t afford basic living expenses and that 24% struggled to afford essentials. With a startling number of American workers facing financial difficulties, it’s critical that you take the time to look into a few money-related activities that could help alleviate some of your concerns.
These are seven money moves to consider if you’re going into debt to cover basic living expenses.
Think About Moving
This option is at the top of the list because over half (55%) of the respondents noted that rising housing costs made it harder to keep up and 29% moved to lower-cost areas or housing markets to manage the financial burden of this expense. If you’re not sure where to start, the best option is to think about moving so that you can save on your most significant cost. You may find that you can have a better quality of living in a different part of the country.
Get a Roommate or Rent Out Space
“If you have an extra room in your house, you may want to consider renting it out,” said Melanie Musson, finance expert with Clearsurance.com. “If you’re living in an area with high housing costs, there’s a good chance you’ll easily fill your room with a qualified roommate.”
A roommate will help bring you some income to help you afford your regular expenses if you have the space. You can find a long-term tenant or try to list any space you have on a short-term platform like Airbnb.
Try To Save On Your Commute
Musson suggested trying to carpool or finding ways to drive less to save money on fuel. “Small savings can make the difference between increasing your debt and getting ahead,” she added.
If you can cut back on your work commute or transportation costs, you can create some space in your budget. You may also want to try applying for remote jobs so you won’t have to commute daily.
Create a New Budget To Match Your Situation
If you consistently can’t cover your living expenses and you’re forced into debt, it’s time to create a new budget for your present situation.
“While it may not sound exciting, budgeting is the number one way to manage your money — and doesn’t need to be complicated,” said Austin Kilgore, consumer finance expert and analyst with Achieve.
You’ll want to start by logging every expense to know where your money’s going. You can use one of the free mobile apps or a spreadsheet to track what’s happening with your money. You’ll want to make note of any expenses that have gone up over the last few months because these could be forcing you into debt.
Find Expenses You Can Cut
“You need to sit down and look at your current budget very critically,” explained Erika Kullberg, attorney, personal finance expert and founder of Erika.com. “Most likely, the expenses that are simply too expensive will jump out at you right away.”
When reviewing your spending to create a new budget, you’ll want to look out for any expenses that you can’t afford anymore.
Here’s how you can find expenses that you can cut or reduce:
- Review your credit card bill to go through the subscriptions that you’ve signed up for to see if there’s anything that you’re no longer using.
- Try to see if you can negotiate an expense like your cell phone bill or insurance to bring the price down a bit.
“At the end of the day, living outside of your means is a math problem,” Kullberg added. “You have to be very realistic about what the numbers are telling you that you can afford.”
Generate Additional Income
A harsh reality is that you may have taken all the steps to get your finances in order, but you’re just not making enough money. At this point, you may want to consider exploring options for boosting your income.
“While it isn’t an answer for everyone, taking a well-paying part-time job or developing a side gig (anything from babysitting to a creative business) is one alternative many people can turn to,” Kilgore explained.
Find Outside Help
The study found that while 28% of Americans took on debt to cover living expenses, 44% asked for financial help from family and friends and 38% relied on community or government aid options. If you don’t want to rely on debt to get by, you’ll want to look for outside help. If you’re uncomfortable reaching out to your social circle, contact your local utility company to inquire about any hardship programs they offer. You can see what resources are available through the Consumer Financial Protection Bureau to see if you qualify for rent assistance.
Kilgore pointed out that SNAP (Supplemental Nutrition Assistance Program) benefits and eligibility expanded during the pandemic, with additional funding for food banks and nutrition services for seniors. You can also check out organizations like Feeding America, which can help identify local food banks. You want to ensure that you utilize the resources that are available to you.
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