Budgeting When You're Broke
By Reyna Gobel | Investopedia
Suffering from a lack of cash? It's likely that you don't follow a budget that reflects your earnings. Smart budgeting prevents eviction, increased credit card debt, and ruined credit scores. It's never too late to achieve your financial goals — get started now with these 10 steps to make your financial life less stressful.
Avoid Immediate Disasters
Don't be afraid to request bill extensions or payment plans. These requests are often granted. If your biggest worry is eviction from your apartment, talk to your landlord, but, also, see if you can get extensions on any other expenses to free up money for keeping your home. For instance, suppose that your rent is $650 and you're $200 short. Your bundled phone bill and cable bill is $60, your electric bill is $100 and your cell phone bill is $40. If these bill payments are postponed until your next paycheck, you can pay your rent now and avoid eviction.
[How to Get a Free Credit Score]
Review Credit Card Payments and Due Dates
If you are only making the minimum payments on your credit card(s), you are flirting with a disastrous credit score. However, avoiding credit card payments will only worsen your debt.
For example, suppose that your minimum payment on a $1,000 balance is $40. You fail to pay $40 on time, so you are charged a $35 late fee. In addition, your interest on future charges is charged at the default rate of 25%. Now your credit card is even more difficult to pay off. Before you know it, you have an overwhelming collection of piled up late fees and missed payments.
Prioritizing Bills
Go over all your bills to see what must be paid first and then set up a payment schedule based on your pay days. You will want to leave yourself some catch-up time if some of your bills are already late. If this is the case, call the bill companies to see how much you can pay now to get back on track toward positive status. Tell them you are catching up and going on a stricter budget. Be honest about what you can afford to pay. Sometimes it's instinctual to say you'll pay the full amount on your next paycheck, but you may not have the full amount available after other expenses take their cut.
Ninety-nine percent of the failures comes from people who have the habit of making excuses. -George W. Carve
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