If your budget shows you have more expenses than income, there are many ways to get out of trouble. Remember, everyone has different priorities. You will have to make the decisions that are right for you.
What payments should I make first if I don't have enough money to pay for all my bills?
- First, pay off your essential household expenses, such as rent or mortgage, utilities, and food, first.
You need to pay your rent or mortgage to ensure you don't get evicted or have your property foreclosed upon. Think about the health and safety of your family when making these types of decisions.
- Many utilities, such as the telephone company, electric company, and gas company, have programs to lower your bill if you qualify. If you think you need assistance, contact your utility company.
What should I do if I can pay off my monthly household expenses, but am having trouble paying off my loans?
- Pay off the loan with the highest interest rate first to save on interest payments.
- Pay your bills right away, so you won't be tempted to spend the money for something else.
- Talk to your creditor. Your creditor may be willing to reduce your payments or change the terms to accommodate your situation. Some creditors might offer extensions, smaller payments over a longer period of time. Some creditors might accept partial payments.
- Get a debt consolidation loan. Be cautious of this option. If loan fees and interest rates are too high, it may not be the best option for you.
- Get professional advice. Reputable credit counselors can help you deal with your financial problems. Some organizations charge little or nothing for their services.
Be cautious of companies that promise to fix your credit problems right away. Credit repair can be a long process that might take several years.
Budgeting Tools
The following are the various budgeting tools that can help you in effective budgeting.
Budget Box System
What is this?
This is another type of budgeting tool that you can use at home. The budget box is a small box with dividers for each day of the month, like a filing system.
How do I use this?
- When you receive a bill, check the due date and place it behind the card that represents the due date.
- As you receive income, pay all the bills that are due
Expense Envelope System
What is this?
This is another type of budgeting tool that you can use at home. This tool is useful if you pay your bills with cash each month.
How to set it up:
- Make an envelope for each expense category (rent, utilities, food, etc).
- Label the envelope with the purpose, amount, and date due.
- When you receive income, divide it into amounts to cover the expenses listed on the envelopes.
Computer System
How can this help me to budget?
The computer is another type of budgeting tool that you can use at home. If you have access to a personal computer, you can create your own spreadsheet. You may also want to purchase a personal finance program. They are available for less than $75.
What are some advantages of using a computer to manage my finances?
Using a computer to manage your finances is relatively easy. Once you set up the system, updating the information is quick and easy. It is important to enter transactions frequently to truly understand your financial position.
For information on another budgeting tool - budget worksheet.
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