BETTER FINANCIAL CHOICES - GETTING YOUR FINANCIAL LIFE ON TRACK
I recently received a Facebook message from a fellow blogger. This blogger has been following my website/ blog social media accounts since I initially started in early 2018. I had never spoken with him in-depth about his financial situation before. Because I am not a financial advisor I am always hesitant to provide certain types of financial advice. He realized this but was looking for some tips on how I managed my debt. This blogger/ reader had followed along my journey since 2018 and undoubtedly knew my money story. He realized that I too had been where he is or in a somewhat similar situation. He knew that somehow I am currently making progress. I am successfully pulling myself out of the hole that I had once dug myself into and he needs help doing the same.
Where was I when I began my financial journey?
• $30 - $40,000 in credit card debt
• Student loan debt still building while I was in college
• Medical debt from a recent pacemaker surgery
• No savings or emergency fund
• Massive debt and despair and what seemed to be no way out
• Late fees and overdrafts had become the normal
• No budget set and I never knew where the money to pay my bills would come from
• Could not afford to feed myself and often ate whatever I could get for free or swiped my badge in the work cafeteria (which would come from my next paycheck)
• Working two jobs sometimes three
• Exhausted and in despair
Where is my reader/ blogger / friend currently?
• Working three jobs
• Debt in the form of credit cards and $80,000 in student loans
• A small savings but no emergency fund
• No retirement savings or investments used the ones he had to pay off some debt
• Years of working extra jobs to have money just to spend instead of paying down debt
• Too many get rich quick schemes that he feels like he chased and wasted money on
• Taking vacations that he could not afford
• Multiple divorces
What I want others in debt to know
You are not alone in your struggles. I know where you are coming from and I know how devastating debt can be. Many people struggle so much with debt that they become depressed and even have thoughts about ending their life. Debt is such an important topic in managing our finances and often such a difficult thing to manage overall. When you first get yourself into debt most people do not have the funds to manage their bills let alone anything extra. Many find credit cards and loans to be a quick fix when they should be eliminating spending if possible and finding other income streams if possible. If you are working three jobs currently there is probably not much time left for taking care of you much less working more.
Working multiple jobs and still cannot make enough money?
I have been there TRUST ME and here is what worked for me and what did not work.
What did work for me when dealing with debt?
• Easy quick meals that I took to work or had on hand at home
• Consistency and hard work building a savings and emergency fund
• Making every debt payment on time even if just the minimum payment at first. Once I could free up some additional money, I added in the debt snowball method and began working on killing my debt consistently overtime.
• Building a savings account and emergency fund using the 52-week money challenge. This is slow and takes a full year to save $1,378 but it is perfect for someone with very little money to start with. The key is sticking to it and just starting to save and not using this money. You will be surprised once you take this step that it gets much easier after this first challenge is complete. I recommend saving this money and not using it at least after the first year is saved.
• If you have medical bills call the hospitals or clinics that you owe the money to and ask to set up a payment plan. This will make your bills easier to manage and will prevent you from owing them in full. This will also prevent you from being sent to collections for not paying on time. I work in medical billing so believe me I know that they will send you.
• Sell things you have around the house to free up money
• Stop going out to eat and spending period (Do this at least for a short time so you can analyze your financial situation)
• Go to your local library if you have the time and get a few finance books to read a couple I suggest are The Millionaire Next Door by Thomas J Stanley and Dave Ramsey’s The Total Money Makeover.
• What you need to realize right now is this…. You must change your mindset and views on money to see changes in your financial life. You cannot continue to live the way that you always lived or you will not see a change in your financial life. Make a promise to yourself today that this is where you begin to make a difference in your debt.
What I do not recommend in this situation?
• Just paying the minimum payments (You will not successfully pay these off for a very long time and it will cost you a lot more in the long run)
• Ignoring bill collectors or not paying your debts
• Continuing to live the way that you have always lived. You need to make a change to see a change happen.
• This will not be a quick process so stop expecting immediate results. I do not care what anyone else promises you, paying off your debt will not happen overnight. Most people do not get into debt without making a lot of bad choices so you need to undo those bad behaviors and practice some good behaviors. You need to commit from today on that you will make a change in your finances and do whatever it takes to get there.
Where do I start to repair the damage I have done?
Step One - create a budget. Lay it all out and develop a plan. How much money do you have? How much debt do you have? Analyze it all and begin to outline your budget. A good way to do this is to pull your last month’s bank statement and go through line by line every purchase made. Write this all down and figure out where every dollar went over the last month. How much money came in? How much money was spent?
Break this down into four categories such as this
1. Bills –Monthly inflexible costs Rent, Mortgage, Utilities, Insurance
2. Expenses - Gas, Groceries things you can control and be flexible on slightly
3. Waste - Eating out, Entertainment, clothing that is not a necessity, shopping just to shop, unnecessary streaming services, eating out, coffee, gambling, lottery tickets, cigarettes, alcohol.
4. Debt - Credit cards, loans, Medical bills
Step Two - You will have to involve your spouse or partner in this and you will have to work as a team to make this work. The whole process of getting out of debt requires you both to work together or you will not be successful.
Step Three - Begin to look for ways to eliminate expenses. The more unnecessary expense that you can eliminate from your budget the better. For example, I do not have a smartphone. Shocking I know but it was one expense that I could eliminate every month to save me significantly. My husband and I have basic phones and pay for two basic phones per month it costs approximately $50 a month for two much less than paying for two smartphones. You could cut cable and just keep Netflix or Amazon Prime or eliminate it all and just watch what you can online for free. Can you afford to have Internet? If not eliminate that for at least a few months until you can get your budget under control. You can cut expenses in so many ways but you just have to determine how extreme you are willing to get when eliminating monthly bills.
Step Four - Call to see if you can lower your car insurance. I wrote this post that tells more about my experience with the company and why I call them at least yearly to make sure I have the best price on car Insurance.
Some helpful resources
• Many local churches offer some sort of help for those who are financially hurting. These resources vary obviously from church to church and may include Food pantries, clothing closets, financial classes, less expensive daycare, car repair clinics, and even some assistance making your bills. These are typically services that may require membership or at least attendance at the church. You are best to start with a church you already attend and maybe go straight to the pastoral staff to ask if they have any of these resources available. My best advice is, to be honest and open about your situation and gracious in anything they can offer. Also, I highly recommend giving back in the future when you can to this same ministry so that they can continue to offer it to others just like you.
• Free healthcare, mental health, and dental clinics. Check your local area for what might be offered but most areas have something like this available.
• Beauty schools and Colleges offer resources such as free or discounted hair services, dental care, or even legal advice from college students that are still in training. Contact a local school or college/university for more details on what might be available.
• Goodwill and Salvation Army both offer vocational training and also great prices on all items purchased in their stores. I purchase a lot of things at Goodwill thrift stores still and love what they do for others and the items they sell. I also donate all of my used items to Goodwill Industries to help support what they do.
Today I posed this question on Twitter
I have a friend/fellow blogger who is hurting financially & looking for advice on handling debt. He is currently working 3 jobs. I know it’s tough without specific details but any advice can help. #Financebloggers#financialadvisors #bloggers what advice can you offer?
These were the responses I received
Penny from Shepicksuppennies.com shared
Put your effort into whatever is paying you. That might mean blogging more...or significantly less. Doesn’t have to stop blogging, but could run guest posts or whatever. Sometimes side hustles pull us away from the more immediate opportunities to earn more. If blogging is paying off, explore ways to expand that!
The owner of Oakmont embroidery shop says
Selling anything in the house you don’t need through local FB groups or craigslist. Also if possible pick up free stuff people are giving away on these sites and try to sell for a profit. Selling plasma could also be an option
Darcy from Wewantguac.com said
If this debt is for different things (ie credit card debt vs payday loans vs student debt vs mortgage) then definitely focus on paying down the one with the highest interest rate.
Martha from Squanderlustpod.com suggests
Check their automated payments/subscriptions. These can easily run on without us getting the value from them. Some may be annual and easy to forget. Especially be careful about anything through the App Store/Play Store etc. Small, 'forgettable' purchases - no physical goods.
Dylan from Dollarrevolution.com recommends
Consider what will take care of the immediate bills and build a buffer. A couple of times I had to step away from my “path” to take whatever paid more to catch up. Turned down an internship that paid $9/hr in my field to do a manual labor job at $18 because of the immediate need for cash. Also, consider things to free up energy. Instead of coming every night, cook in bulk & quick reheat. When working that often you need to try to capture back any free time.
Stephonee from poorerthanyou.com advised
I will say that when things are this tight, the smallest efficiencies MATTER. Things like doing a debt snowball (as opposed to avalanche) are costly. It sucks but it's better to do the mathematically-efficient things to increase bandwidth.
Finally, Kandace from Kandicebridges.com says
Call creditors and ask for a reduction in the interest rate they charge.
Jeff from Mondaymorningpancakes.com shared
Well, there isn't much more time it sounds for classic income generation. I would build a monthly mandatory expense list, see how much is leftover and build a budget plan from there. Add a few line items for entertainment and then debt snowball the lowest amount. I just hope there is enough in the budget to get a snowball moving. Also, it will be mentally daunting depending on how much entertainment is woven in. That's why no matter how dire the circumstance. I always try to throw a bit of that in the budget.
Michelle from MicheleCaganCPA.com recommends
Making multiple smaller/partial payments during the month may be easier than one larger payment on the due date. Bonus for credit card debt, that reduces the average daily balance and interest charges.
Special thanks to Kimmie from Worththewar.com for creating the image used on today's post
