How to Get Ahead When You Don’t Make Enough Money
I received an email this week from Anne (name changed) who wrote:
“I am so frustrated with our financial situation! Every paycheck once we pay everything we owe, we are left with no money to live on so we end up using our credit cards for gas and groceries, which only digs the hole deeper. How are we supposed to get ahead when we are barely treading water now?”
First of all, I TOTALLY understand. In December of 2010 we sold pretty much everything we owned and moved to another state to train for an overseas job. During the training we realized that we had made a HUGE mistake and we essentially had to start over which meant finding jobs, a home and everything we needed to fill it.
Thankfully my husband found a job fairly quickly, but when bills came due we had to pay them with my husband’s paycheck from that week and pray that we had enough money for gas and groceries to get us to the next week. It was very stressful and after almost a year of living this way we were desperate to change our situation.
We took a few basic steps that I’ll share with you today and within just a few months our financial situation started to shift.
Make a Decision
The first step in changing our finances was to dig deep and decide what we really wanted in life. Did we want to continue the stressful way we had been living, or did we want to make a serious change?
Even if our situation looked impossible we knew that we had to do the best that we could to start turning things around. My husband and I talked about our financial goals and agreed to work toward them together. Making the commitment to change was super helpful when we had to make difficult decisions.
Plan EVERY Paycheck
The key to making our finances work was to plan every single paycheck according to our top financial goals. I scheduled an appointment with myself every payday (and still do!) to look at our income, the bills that were due in the next week and our current financial goals. Once I had a plan I checked in with my husband to get his thoughts and then we worked our plan.
Dave Ramsey teaches that there is a “nerd” and a “free spirit” in every couple, so the “nerd” should do the planning and detail-oriented parts of the finances and then share the plan in a short 10 to 15 minute meeting to get feedback from the “free spirit”. This works well for us.
Read How to Plan Your Paycheck HERE for details and to print a free Paycheck Planner.
Pay Essentials First
When your financial situation is unstable you can easily lose control and allow outside circumstances to determine where your money goes. To regain control of your money you have to decide what your real priorities are and make decisions based on those priorities.
Taking care of your family’s basic needs (food, power, gas for your car, rent or house payment) has to come before making any other kind of payments or spending other money. (To see practically what our budget and spending look like read THIS POST.) We have found that if we make our mortgage or rent payment first, it is easy to find sources of food (local churches, food pantries, etc.) if we run out of money that week.
Receiving calls from creditors can be unnerving, but you have to make your family’s needs your top priority and pay off your debt AFTER you make those expenditures. Your credit score may suffer, but that’s the least of your worries in this circumstance. You need to stop using your credit cards for necessities and going further into debt.
Set Up A Second Account
Once we made the decision to work diligently to change our finances, I knew that I needed to have a plan for managing our money that would work for us. I am very visual AND an impulse spender so seeing the money in our account led me to believe that I could spend the amount I saw.
To solve this problem we decided to set up a second checking account to save money for upcoming expenses and “trick” ourselves by moving the money out of our primary account on payday. I created a spreadsheet with all of our monthly bills in order of priority (rent, utilities, etc.) and we started putting money into the second account from every single paycheck, no matter how small it seemed. (To see how to use a second checking account to get ahead, click HERE.)
Acknowledge the Truth
When you’re struggling to make ends meet it’s easy to become overwhelmed and make poor decisions because of the way you think. I know that when we were struggling the most I felt hopeless that our situation would ever change so I would make excuses like “We’re not going to have enough money anyway, so who cares if we spend this $4.00 on drinks at the gas station?”
But those $4 and $5 expenditures added up to $50 a month or more that we could have been using to change our financial situation.
I’m not saying that you should never have any fun, but pay attention to your mindset and the excuses you make about spending money unnecessarily. By determining our family’s actual NEEDS and paying those first, we could easily see extra money in our budget that we hadn’t noticed before — and by simply being faithful to put the little bit of extra money into the second account a little at a time instead of spending it, we were able to pay each bill when it was due and still have money left in the account for future bills.
Increase Your Income
Sometimes even when we drastically cut our expenses and we are very disciplined with our spending, we simply need to bring more income into our household. I understand that dilemma as well, and it’s one of the reasons that I started researching how to make money with my blog. It’s taken time, but now my blog is a significant source of income for us.
If you need extra money, try my suggestions for How to Make Money HERE to get a little ahead.
As a result of making the choice to establish these new money habits, we were able to start consistently paying our bills AND saving money. The little bit extra we added to our second account quickly added up which enabled us to get ahead on bills and start adding money to an emergency fund.
That’s not to say that everything has worked out perfectly.
As I mentioned recently, we currently owe thousands of dollars in medical debt, but we are applying these same principles to pay down the debt as fast as we can.
My advice to you is to never give up hope and to take tiny, baby steps to reach your goals. If we can do it, you can do it!
I would love to hear your advice so please leave a comment. 🙂
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I get paid monthly on the last day of the month and I find it really difficult to plan for my expenses. I always either over budget or under budget. Its difficult to track spending for the whole month. Any tips?
That is tough Tara. One thing that you might consider is using the envelope system and dividing your total spending money by the number of weeks in the month. So for example, if you’re paid $2000 a month, you would take out your fixed expenses like rent and utilities first. Let’s say that leaves you with $1000, then you would divide that by four for four weeks giving you $250 per week for all spending. If you end up spending extra on groceries one week, then you will have less for going out or clothing, etc. Does that make sense?
Yes that does make sense! Thanks for the advice, it helps a lot. I actually started using your Freedom Account tracker and modified it for my needs so I can make sure I set aside enough every month for next month’s bills. Hopefully this helps! Thanks for the advice and for your awesome blog!
So glad the Freedom Account Page is helping you Tara! Let me know if you have other questions. 🙂
I could so hug you right now. Kimberlee, my husband and I have been having financial trouble for years. Mostly due to BOTH of our spending habits. I have prayed. I have cried. I have budgeted my brains out. It’s to the point where we can’t pay for our essentials without using a credit card. All of our money is taken up by credit card bills. As of right now, after blood sweat and tears from myself. I have decided to let some of the credit cards go for now to take care of my littles. It will get paid off eventually. What is a bad credit score to me if I’m not buying stuff I don’t need? Thank you from the bottom of my heart for reaffirming this for me.
I am so sorry that you are in this position Tamra but so glad that I could encourage you. You do have to place necessities for your family above paying off the debt and then work on the debt a little bit at a time. I know it can be overwhelming but you CAN do this!
I totally understand where this reader is coming from. For most of my adult life, we lived the typical American lifestyle – credit cards, debt, and a buying mindset. One month we spent $750 on eating out then spent $750 on groceries. And I wondered why we were living paycheck to paycheck. Unfortunately after a divorce and severe medical issues, there was more month than money. The cable had been cut, cell phone went to prepaid basic text and talk service, and cut anywhere we could. We even sold stuff. I started researching ways to cut back on the only thing I could cut by on which was groceries. I started gardening, canning my own stuff, using up everything, no food wasting and after 3 long years I finally have a bit of breathing room with each paycheck. The biggest problem I found living paycheck to paycheck is the amount of emergencies that come up. Every time a little money was saved up, something would happen where I had to use it. There have been times when the washer broke and I had to hand wash clothes and hang clothes to dry to avoid paying for a dryer. But I found that if you are willing to really get out of debt, then you have to have patience and be able to do without things you thought you needed.
“But I found that if you are willing to really get out of debt, then you have to have patience and be able to do without things you thought you needed.” That is so true! Most of us think we have to go into debt to replace the washing machine immediately when in reality we can hand wash or go to a laundry mat. It is very inconvenient to avoid debt but then again, it’s super inconvenient to make the payments!
Thanks for taking the time to comment Andrea!
I can so relate to not having enough left after paying bills, and for us, its not possible for me to go out to work. Due to many health issues I can no longer work and am waiting on a disability decision. We too have had to use a credit card for living expenses and have no idea how we can possibly do otherwise at this time : ( I already do what I can to save on household things like groceries by cooking at home etc. I do swag bucks and a few other survey sites like that, but it only averages about $25 a month. That’s certainly not enough to make up the difference my lack of a paycheck makes : (
Hi Rose –
I am so sorry that you are in this position. The first step I would suggest (and maybe you have already done this) is to cut your expenses drastically by purchasing only needs until you can find some other sources of income. I have a post with some money saving ideas HERE that may give you some additional ways you can cut your expenses.
The next step I would suggest is selling anything that you can sell: an extra vehicle, furniture, old jewelry. I have a post HERE with tips for selling your stuff.
After that, is there any skill you have that you can use from home like tutoring, editing, giving music lessons? There is a book at the bottom of THIS PAGE that tells you how to become a virtual assistant.
I hope these ideas can help. Thanks for taking the time to comment!
Rose I am in that SAME boat right now. Due to medical health with myself and my son I have had to stop working in February of this year. Since then we were unable to pay rent for March and April and by the end of April our landlord told us we needed to leave or he was going to evict us. We left before our credit got even more messed up. My husband works 5-6 days a week and brings home between 2000-2500 a month but with just FIXED expenses(rent electric, etc) our bills are around 3000. We got rid of a lot of stuff and put what we could in a 10×10 storage unit for $160 a month while we live with my best friend and his parents and his sister. We take turns cooking meals ( we are now a family of 7) and pay the bills we still have while waiting for social security/disability to decide if we qualify.
My father in law took our credit cards from us so we can’t use them anymore, we survive on what my husband makes or we go without. It’s very hard. I just have to have faith that God will provide for my family and I when it’s His timing. Righr now I’m just awaiting decisions and taking care of our health. I hope things turn around for us both soon.
I hope things are much better for you by now!! We are still struggling to pay things off, but I DID get my disability and we no longer use credit cards. only kept one for an emergency , since we still do not have an emergency fund. [hoping by June we will]. Lifting you up in prayer!!
It is so hard to be in this spot. We sold our house, paid off all of our debt and now have a 3-6 month emergency fund, but we are still having a hard time paying monthly expenses and having money left over for necessities. I thought when we paid off our debt we would be in a great financial spot, but not much has seemed to change. For us, I think we need to make more money, we are living off of one income and I stay home with the kids. Thanks for your ideas and this post!
Hi Beth!
Good for you for paying off all of your debt! Woohoo!
If you have a written budget and are tracking your spending but you still can’t make ends meet, then you may have an income problem as you have assessed. I would track your spending first. I know that it’s easy for my husband and I to let some extra spending sneak back into our lives so I really have to stay on top of it. Spending $20 here and $10 there really adds up and makes a difference.
Thanks for taking the time to comment Beth!