Getting Started and Fixing Finances

[kathy73]

I am trying to get my financial situation under control. There are alot of great tools available, but how do I get started if I am behind on payments? It is a bit frustrating to be behind all of the time and I want to get caught up but do not know how. Within the past year I got divorced and that really wrecked my finances.I make enough money to live on, but seem to always have nothing in the bank by the time I pay bills. I find myself struggling every month. I have even fallen into the payday loan trap. I know there are things I can do to cut back, but without anything to start with I am having trouble seeing the light at the end of the tunnel.
Please help??

[Kotonk]

You might have to pick up an extra job on side if you can't make ends meet. It can be anything from doing yard work, baby sitting, washing cars, dog walking, etc to get in the positive cash flow. You definitely don't want to use a payday loan because they charge some crazy fees just to get your own cash. You may want to sell some of your unwanted stuff over trying to get a payday loan. I would also suggest never to cash in on your retirement account if you have one because you will definitely lose 50% of your account (10% IRS early withdrawal penalty, plus income tax). Don't use your credit card if you can't pay your bills in full every month. I suggest using cash or debit card.

You definitely need to look at your expenses, are you paying $100+ on monthly cell phone bill, if so get rid of it and get prepaid phone. If you have cable tv, get rid of it. There are a bunch of things you should be looking into. Maybe you have to go into using the "envelope system," you budget your money into different envelopes for different categories, like utilities, groceries, entertainment, rent, etc. If your envelope is empty for the rest of the month, you can't afford it according to your budget.

Maybe you should listen to the Dave Ramsey show on podcast, which is free and get an idea of how to budget. You may want to pick up a book or two at the public library, which is free and read up on budgeting.

[BMEPhDinCO]

The first step is figure out what is coming in and what is going out. Make a list of all your income (spendable, retirement investments, for example, don't count). Make a list of all your expenses (include monthly as well as irregular, such as car registration). Start figuring out what can go, some examples are:

cell phone (or reduce plan)
cable
internet
memberships

then where can you reduce:
car gas (drive less, take bus)
groceries (learn to shop cheap and eat cheap)
electricity and water (don't use the dryer, unplug anything not needed, etc)

Post your first lists up on these forums and we can help you with the other stuff. If your income is less than your outgoing expenses, you will have to get another job or start selling stuff.

Hope that helps, relax, as bad as it seems, it can get better with effort!

[skydivingchic]

The first step is going to be getting a handle on your money coming in and going out. Go through your old bank statements, CC statements, etc to see where your money is going. Spend the next few months writing down every single penny you spend anywhere. You'll also want to consider stuff you have to pay for like car registration, vehicle maintenance, etc that are necessary expenses but may not be occur every month. Figure out an annual cost for these and divide by 12 to figure out how much you need to put aside monthly. Total up your spending and your income. Which number is greater? Obviously you want your income greater than your spending. If it isn't, you'll need to find ways to fix that - get a second job, reduce spending, sell stuff, etc.

If you list out this information for us, we can help you find ways to cut spending. Also, give us a list of your debts and payments that are behind - amounts, interest rates, late fees or penalties, etc. We can help you strategize on what order to pay stuff down.

Without more details, we can't really give you any specific advice beyond cut spending and/or increase income. There are lots of very smart and helpful people here who have been there, done that. So the more detailed info you give us, the better the feedback you will get.

[snafu]

Divorce does nasty things to people emotionally and money-wise. I suspect money is sliding through your fingers via unconscious/unaccounted spending so that your out-go exceeds your income. You've been given excellent advice based on limited information. The folks who respond want you to be successful and will cheer your every small step through the process to good money management. There may be short term feelings that are uncomfortable but once you are back in control of your money instead of the money...or lack of it controlling you, you will have the extras again.

If you continue with PayDay loans and high interest mistakes things spiral down very quickly.

[jpg7n16]

Step 1: Budget income and expenses
Step 2: Take inventory of all your assets and debts
Step 3: (To be determined based on steps 1&2)

We need to see if you can afford your current lifestyle on your income, and if you can afford to keep the assets you have.


If you could please post the following, we would be able to assist you much better:

Income/Expenses

• Income before/after tax
• Monthly expenses (itemize as much as possible)
• Monthly savings

Assets/Debts

• Major assets (house, car, investment accounts, 401k, checking/savings, etc.)
• All debts (balances, monthly minimums, and interest rates)

[Gina23]

Use Mint.com... it will pull everything into your viewfinder and let you set a budget. Once you see how much you are spending after it's categorized it's shocking and should scare you into shape. Just my opinion.

[kathy73]

Thank you for the advice

Thank you all for your advice. I will pull everything together and post it. I really appreciate your input. I am too close to the situation to really view it objectively. One thing that I really took notice of this weekend was the amount of money I give my daughter. She is old enough to have a job, so I really need to cut back on what I give her for non-essential items. I've cut back on some of the things I buy for myself, but could probably continue to find new ways to cut back. The payday loan debt is really frustrating.

[isaac]

Pretty excited to see your reply to JPG and what advice he has to offer you. Good learning experience here. Thanks for sharing with us Kathy!

[isaac]

Use Mint.com... it will pull everything into your viewfinder and let you set a budget. Once you see how much you are spending after it's categorized it's shocking and should scare you into shape. Just my opinion.

Oh Wow. I just added my Checking/Savings/Credit account to Mint.com. You're right it's shocking! Almost $800 last month in FOOD (grocery, fastfood, dining, etc..) $700+ in "AutoExpenses", although I think it includes car payments in AutoExpenses, I think that should kinda be a "Bill" but whatever! Still... Thanks for the link! Good Site

[phantom]

Oh Wow. I just added my Checking/Savings/Credit account to Mint.com. You're right it's shocking! Almost $800 last month in FOOD (grocery, fastfood, dining, etc..) $700+ in "AutoExpenses", although I think it includes car payments in AutoExpenses, I think that should kinda be a "Bill" but whatever! Still... Thanks for the link! Good Site

If you don't agree with the way Mint classifies something, you can change it and set a rule so that it gets it right in the future. You can find an edit button on the transaction to do this I believe. Sometimes Mint does a really bad job with categorization, so this can be important.

[sblatner]

Kathy, regarding your post re what you give your daughter, we have two teenage boys. We give them an allowance and then some more for spending money and they are not allowed to ask for more during the month (unless the circumstance is extreme). The reason why I break it out is that the allowance is guaranteed each month where the spending money might be variable. I don't want them to come to me for each movie, meals out with their friends, dances at school, school games, etc. That has to come from allowance and spending money. I feel so much more in control than I used to when I was handing them money all the time and I could never remember where all my money was going.

My rule to them is that I want them to use their spending money. We have one tightwad who would save everything and never have fun so this way he is encouraged to go have fun and he isn't spending "his money" (for the most part - I'm sure they go into their allowance sometimes but I really think of allowance for saving, tithing, music, etc.) If I find that they aren't going out and using their spending money, then I cut it back the next month.

Just my 2 cents.

[kathy73]

Thanks!

Setting up a monthly allowance is a good idea. It seems like I am constantly giving my daughter money. If I set up an allowance it will help her learn to budget, too.

Thanks!
Kathy

[kathy73]

Monthly Allowance

Hi sblatner,

You posted that you gave your boys a fixed amount of allowance per month. Can I ask a range of how much you give them? I don't need the exact amount, just a range to try to figure out what is appropriate.

Thanks,
Kathy

[bjl584]

Setting up a monthly allowance is a good idea. It seems like I am constantly giving my daughter money. If I set up an allowance it will help her learn to budget, too.

Thanks!
Kathy

How old is your daughter? Can she get a job and make some of her own money? It will definitely help her understand the value of money.