I’m not sure that there is anything worse than adding up all of your expenses and recognizing that you don’t make enough to pay the bills you have that are necessary for housing, food, and transportation. If you’ve already cut your extra expenses (find out how to do that HERE), and your income is still not enough, then it’s time to take more drastic action.
Step 1: Is It Temporary or Permanent?
The first thing to determine is whether this lack of income is temporary or permanent.
Temporary
If you have just lost your job, are on unpaid maternity or medical leave, or are dealing with a temporary decrease or loss of income for any other reason, then it is important that you address how you will manage your finances and get those bills paid. I’ve written a post on just this topic, So You Lost Your Job, Now What? and highly recommend you check it out for this specific situation.
Permanent or Long-Term
If, on the other hand, your income is going to remain low for a considerable amount of time (and this can be for many reasons), it’s probably necessary to consider some more specific measures you can take.
Eliminate Any Contract You Can
This seems like a no-brainer, but it’s hard to believe that your cable and internet actually have to go. If you can’t pay for all of your expenses, something has to give, right? So, if this is something you haven’t addressed yet in your budget, look for anything you are categorizing as “necessary” that isn’t actually necessary to live. Obviously, if the income you do receive comes by use of the internet, then it might be helpful to keep that, but if you have a free Wi-Fi center somewhere nearby, then you might choose to save the $80 per month to help your income cover the necessities such as food and housing expenses. The same goes for your Netflix, Hulu, Amazon Prime, Cable, Cell Phones, and anything else that is not absolutely necessary.
In the case of a buyout policy, you might want to run the numbers. At one point in time, Justin and I chose to get out of a contract that required we pay $15 for each of the remaining months of our contract. Our actual monthly bill hovered in the area of $225, so when I ran the numbers for the remaining ten months of the contract it became clear that it was cheaper to simply pay it off.
Overall, we saved $2,100 that year just by cutting that one contract from our budget.
What can you cut today that has seemed “Necessary” in the past, but is keeping you from paying more important bills?
Tip: You can’t make cuts if you don’t know the current state of your finances. Grab this FREE Family Budget Workbook to help you get (and stay) on the right track.
Sell Anything You Don’t Need
Look around you and determine what you have that you don’t need anymore. And I mean ACTUALLY need. I know in our home we have musical instruments and technology items that, while we would be sad to see them go, it would be better to use the money we could make from them to pay for things like our mortgage payments and utilities if we ever needed them to.
You can choose to sell your items in several different ways: to friends and family, over Craigslist or Facebook, or by having a garage sale/estate sale. Whichever way you choose, make sure you aren’t spending more money to sell those items.
What items could you sell today?
Contact Debtors
One of the biggest concerns about having too little income to pay your bills is any debt you currently are required to pay off. Make a list of all your debt (use this FREE printable worksheet) and who you owe it to and then spend a few hours calling each and every debtor to request a hold on the need for payments.
Although you might find that some debtors won’t have any flexibility when it comes to the payments you owe, others, including medical institutions and student loan servicers, will often be able to put a temporary hold on the payments or waive them all together based on your income.
You won’t know if that’s an option for you, though, if you don’t actually make the calls.
Which debtors do you need to call today?
Seek Additional Employment
If you are already working forty hours per week each and every week, and your income is still lower than your expenses, then it might be time to decide whether pursuing additional employment is the right choice for you. Finding a night job, or a supplementary job such as babysitting or cleaning houses might bring in just enough income to help you pay your bills. Sometimes just a few extra hours per week is all that’s necessary.
What additional employment options might you consider?
Take on a Side Hustle
One of the more common ways to make a little money on the side is to start a side hustle, or essentially work for yourself on the side of a job you already have. You could choose to sell items on the side, such as essential oils, jewelry you make, or whatever else you are already using as a hobby to make a little extra money.
If you are interested in taking it to the next level, you could actually create your own business doing something related to your current employment and education. You could write a blog, edit books, start a lawn mowing or cleaning service, or do some website maintenance on the side and make a little extra money.
Word of caution: starting a side hustle can cost money. If you find that it will cost you money you don’t have to get started, then that is not for you at this point if you already cannot pay your bills.
If freelance work is your thing, but you don’t want to take the time to start your own business, then it might be valuable to check out some of the freelance options online or with other businesses in your area that are already established and will pay without you investing money ahead of time.
Do you have a side hustle you can’t wait to start? If so, will it help you create more income without costing you money to get up and running?
Downsize Your Living Arrangement
If you’ve made the effort to increase your income and it’s still not meeting your expense needs, then it might be time to consider downsizing your living arrangement to a smaller, less expensive option. I don’t say this lightly because, it’s often not easy to get out of a lease, much less sell a home you love, but if you aren’t going to be able to pay for it long-term, then the best thing to do is to give it up before you face eviction or foreclosure due to your inability to pay.
Do you have a parent, family member, or friend that you could rent a room (or two) from for a little while until you get back on your feet? Is there a smaller apartment or house that would bring your expenses down to a manageable level?
Use Your Savings
Making the choice to use your savings to supplement your income can be useful in the short-term, but in most cases, the money will eventually run out and you will be back to address all of the steps I’ve mentioned thus far, without the buffer in the case of a true emergency. I still highly suggest using it as a last resort, after you’ve made adjustments to your expenses and attempted to bring in a supplementary income.
Ask yourself the following questions:
Are we using our savings as a way to prolong the inevitable (having to sell other items, downsize our home, or cut extra expenses)?
[tweetshare tweet=”Are you using your savings as a way to prolong the inevitable?” username=”sarahlbrumley”]By using our savings, are we putting ourselves in a position that if an emergency comes up, we won’t be able to pay for it? (i.e. major plumbing issue, electricity problem, fire, medical issues…)
Ultimately, when and how you decide to tap into this resource is a decision you and your family will have to make.
Revisit the Budget
Once you get to the point that your income is actually covering your expenses, it’s important that you revisit that budget to keep it that way. Check back on your goals and make sure that you have the appropriate categories embedded in that financial plan so that you don’t end up in this situation again.
Have an awesome day!
