Creative Budgeting When There is Not Enough Money
For many, personal budgeting is done when there is a personal debt crisis. This personal budgeting is triggered by not having enough money to pay for living expenses each month and that usually means having to use the credit cards to make ends meet. When things get this bad, you are going to have to use some creative personal budgeting to get your money under control. Here are a few areas to consider:
See what it is that you can live without or substitute. There was once a person who looked at her personal budgeting plan and realized she was spending $25 every month at the dog groomer. The dog was a poodle and she started learning how to clip and trim the dog’s coats. In a short time, $25 was no longer being spent at the groomer and the dog had a trim that looked almost as good as the professional’s. Analyze your cable television bill. Most realize that half of what they are paying for is just not worth it such as premium channels that rerun their content more often than what they are worth.
Look at your income tax deductions. Everyone loves to get that big income tax refund each year but few stop and realize what that big return indicates. Your large tax refund check indicates that you gave the government your money to play with interest free. Do you think the government would let you play with their money interest free? If you would rather have part of the money you pay in withholdings throughout the year instead of one lump sum each year then visit your payroll department and ask to fill out a new IRS Form W-4 (for U.S. taxpayers). Take the maximum allowable deductions you can take and your next check should have a little less withheld. That money can then be put into your personal budgeting plan for debt reduction or savings.
How much are you contributing to your retirement? You might try cutting back a small percentage on your employee contributions to your 401K or 403B plans used for retirement. Don’t cut back all of it but just a small percentage. When you can get to a point in your personal budgeting plan where you have more money left over in the month then you can up that percentage.
Utilities can usually wait a couple of months before they disconnect you. When you have debt problems and you are trying to get a handle on your budget, you may have to get creative with paying your utilities in your personal budgeting plan. It depends on the utility company in your area but some will not disconnect you until you are two months past due and the late fee is minimal and has little impact on your personal budgeting plan. When you are faced with a choice between getting a cash advance from a credit card and paying a small late fee on your utility bill, take the latter. The idea is to buy yourself time to get your bills paid and make adjustments to your personal budgeting plan. Keep in mind too that you will still have to come up with the money to pay for two months of utilities use and this suggestion is for only when you have a true emergency (more money going out than coming in).
Look at other “what if lightning strikes” deductions in your paycheck. Insurance is good but when you are having debt problems and trying to establish a personal budgeting plan, you have to look at every area. It is possible to be insured for almost every risk there is and it will cost you too. It’s kind of like insuring for some remote risk like lightning striking. You can’t predict the future any better than a circus fortune teller. Take a very tough look at your insurance expenses and see what you can cut in your personal budgeting plan by raising deductibles.