Your finances are a mess. You can’t keep up with bills, there isn’t enough income to cover bills, you’re late, and getting shutoff notices and have no money for anything remotely fun- no eating out, no fancy foods and coffee. The internet loves Dave Ramsey style advice, but that advice is out of touch with the reality of the disaster budgeting. It’s easy to get overwhelmed and not plan, and just run around putting out fires like crazy, and get nowhere.
What I want to do, is try to outline how I got myself out of disaster. I had been missing work due to migraines, and I was covered by FMLA, but the time was always unpaid. I was losing 20-40% of my take-home pay, and struggling to make ends meet. I was late paying rent 5 months in a row(which also added fees I couldn’t afford. I was down to a day before being evicted, when I paid the last late one, and finally was able to pay on time. I was driving Uber to try and make up the lost wages, but that paid less than half of my job per hour, so it was rough.
Depression and stress made it even harder, but I did finally get out, and back into the black, once I pulled up my big boy panties and got to work on goals rather than just fighting every fire that came up. I left some fires burn to the ground. I chose which fires to fight, and made sacrifices. You will too, but only you can decide your path.
Before the method – a note- Do not get payday loans to try to get out of disaster, they cost a fortune and will only delay your actual recovery! Sell things you don’t NEED. Do you need 3 TVs in your house? Do you even have time to play that PS4/Xbox etc? Tablets, Jewelry, Decorations, etc. You can buy this stuff back later, at the same relative cost as you sold it.
If you have to get money quick, take some non-essentials to a pawn shop, the finance charge is usually way lower than payday loans, but still, this should be a last resort, same-day emergency only.
Ok, so on to the method. My first major goal was to prioritize what bills got paid and when.
Prioritizing where your money goes.
Budgeting out of disaster, looks very different from budgeting in normal financial situations. When you don’t have enough income to cover all the bills on time you need to dig deep and prioritize.
It won’t be the exact same for everyone, but I’ll add reasoning to my list, so that you can think through your own situation and adjust accordingly.
Second, you likely will hurt your credit significantly through this process. But you can’t really use credit for things like buying a house, when in disaster. You can repair later, and I plan on making a guide for that too, but there are decent ones out there.
Stop paying all unsecured credit. Call them and tell them you are in financial hardship. Most will work with you, extending payment dates, etc.
#1 – Transportation
You have to be able to get to work. Whether that’s a car, bike, bus, etc. It’s possible that you could be walking distance from a job, but it wasn’t really for me.
#2 – Nutrition
Notice, that I did not say “food’. Eating nothing but Ramen noodles or dollar cheeseburgers will only make your future harder. But, I’m not saying to go Organic Gluten-Free etc either. Find bargains that provide nutrition. Clearance deals, check the deli and produce sections early in the mornings for deals on food with expiration coming up soon. Walmart sells these footlong sandwiches, and I often find them for $2.50 on clearance in the mornings. Veggies like carrots, cucumbers, green beans are cheap and provide some great nutrition. Plan on eating at home almost exclusively.
#3 – Communication
You need to be able to talk to employers. But you don’t need a fancy phone and top tier phone service to do so.
I canceled my T-Mobile account, after being with them for 11 years. I had a balance on my equipment that I will have to pay down, but after I’m back at normal. I went to Boost Mobile, and saved 65% over T-Mobile. The data was advertised as 4g LTE… but it was the slowest 4g I’ve ever had. But the calls worked just fine.
#4 – Housing
Dig deep and check your options to move to a smaller, less expensive place. I went from a 3 bedroom to a 2 bedroom in an economically disadvantaged part of town, and saved over $500.
I would think it through long and hard before breaking a lease though. That will make your future housing options very limited. If that isn’t an option, get a roommate to split expenses.
#5 – Utilities
If push comes to shove, it doesn’t make sense to keep the lights on in an apartment you are going to lose. If it gets that bad and you’re in shut off notice territory, start looking for other options. Call each Utility and tell them you’re experiencing financial hardship and ask if they have any assistance programs. Usually, they will at least let you push out your payments, but often they have resources that they will direct you to help cover the bill. Many local churches also off assistance, of course, they will want to talk to you about your relationship with Jesus Christ, but they do help people. In Austin, you can dial 311 from your phone, which is city services and they will refer you to local support.
Most utilities have a reconnect fee if you get shut off. Pay very close attention to this. You’ll have to call them and ask for shutoff dates usually, and I would call them the day after a due date that went by unpaid. I failed to track this close enough and got my power shut off, and it cost me $225 to get it back on, $75 for the reconnect fee, and they then insisted on a $150 deposit. It hit super hard and made recovery much much worse.
#6 – Non-essentials
Here is the hard part. Cancel all subscriptions that you do not NEED. Especially ones that are distractions from meeting your goals. IE, Netflix, Cable etc. Stop paying anything that’s not essential, until you are caught up. Keep a list of these bills, so that you can address them later and also prioritize when to pay something.
Use public wifi to search for jobs. Most apartments have business centers for residents, that have Wifi, Computers, and printers if you don’t have your own. I went to Taco Cabana from 4-7 for Happy hour. I’d buy a $.99 beverage, and use their wifi for a few hours. There are apps to find public wifi as well. You can almost exclusively, job-hunt and apply for jobs with a smartphone. I almost never used a computer, except to re-write resumes. Small edits, I would just do on my phone.
Coming up next – Making a budget spreadsheet.
Next, I’ll go over my method to track daily, your bills and income. This lets you see into the future and plan, but also keep track of the essential bills so you don’t rack up fees, as I did with my electric.