How to Budget when you’re Broke

by Justin Weinger on June 10, 2013

If you’re constantly low on cash it’s likely that you don’t follow any type of budget that reflects your earnings and spending. The fact is, even if you are constantly broke you definitely should use at least a basic budget so that your chance of being evicted from your apartment, paying your credit card bills late and ruining your credit score are all avoided. It’s tough, we know, but our blog today will help you to get started and give you a little relief from the stress of financial worries. Enjoy.

Whenever possible you should avoid any immediate disasters by asking for extensions on your bills or some type of payment plan. You should also talk to your landlord to see if you can get an extension on your rent or, if you can figure it out, you may be able to get an extension on some of your bills and use that money to pay for rent before it’s late. For example, if you’re $200 short on your rent you could look at your bills and figure out which of them to put off (only for a month) while you use that money to pay your rent today.

Keeping on top of your credit card payments and their due dates is vital if you’re keen on making sure that your credit score doesn’t take a disastrous tumble. Prioritizing your bills to see which need to be paid first is your best bet, after which you can set up a payment schedule based on when you get paid. If you talk to your credit card or other company about your bills you should be as honest as you can about what you can afford to pay so that any arrangements that they make will be met by you the next time a payment is due

If you’ve been using the ‘10% savings rule’ it might be a good time to put that aside if you’re in the middle of trying to fend off debt collectors. Frankly, it just doesn’t make sense to have a few hundred dollars in savings if you’re paying hundreds of dollars in interest and late fees. If you are keen on getting back on track financially than you might just need to let your piggy bank starve for a while until you get there.

Reviewing your spending every month can help you to make adjustments to said spending and cut back on it so that you can use that money to pay down your debt. Calling your credit card companies and asking for new, lower interest rates is also an option but only if you haven’t started paying your bills late already. Even if you have done that but it’s only been once or twice you may wish to consider giving them a call. Frankly, if you don’t ask you won’t ever know.

Of course one of the most important things to do is to cut back on anything that is not a truly necessary expense. If you’re always broke but you’re always purchasing $8.00 coffees and Starbucks, you go to the movies once or twice a week and your fridge is filled with food that’s half rotten and spoiling you’re wasting all sorts of money and prolonging the agony of being broke. Until the day that you can afford the lifestyle that you want your just going to have to settle for the lifestyle that you can afford.

If you want to really get down and dirty you can start a journal and note every single expenditure that you make during the month. (There are plenty of apps that you can download that will make this much easier.) Frankly, it isn’t how you track your money that’s important but how much you are tracking. If you’re going to do this you should track every single cent that you spend and, if you want to go even further, divide those expenses into separate categories like food, utilities, rent and clothing.

Once you’ve track your spending for a month you’ll be able to see where your money is going and where you can start making changes. By changes, we mean where you can stop spending money foolishly. Entertainment, clothing, alcohol and eating out are the 4 things that waste most people’s money so make sure to look at these 4 as closely as you can.

One last bit of advice is something that many people balk at but can be very useful if you want to pay down your debt and get out from under it quickly. Simply put, you can find a new source of income. Getting a 2nd job, searching for a better job or looking for work on the side are all viable options. While this can be depressing for some people the fact is that  it could possibly be one of the best ways to get out of debt quickly.

At the end of the day the option of whether to constantly be broke is yours and yours alone. Knowing how much money that you make and what your basic expenses are should also tell you what kind of money you have left over for non-essential expenses. Unless you’re debt free you should be using this money to pay down your debt and, once it’s paid down, use it to then fund your savings or retirement accounts.

Hopefully this blog has given you some advice that you can use and some information that is valuable to you. Best of luck paying down your debt and with your budgeting. There are plenty of other blogs here on our site that talk about budgeting also so, if you’re keen on reading them, have a look around and educate yourself. See you soon.


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