When Expenses Outweigh Income

Few things are as stressful and troubling as the experience of burdensome debt. Many who find themselves without sufficient income to meet their expenses report anxiety, depression and relationship trouble as a result of the burden. It is also not uncommon that self-esteem is impacted.

There are a number of causal factors that can be attributed to debt. Perhaps you have been laid off, downsized or experienced a divorce or catastrophic medical event. Sometimes it is simply haphazard spending that causes expenses to outweigh income. Whatever the reason the goal is relief from the creditor calls, worry, stress and debt. A secondary goal, which can be just as important, is to regard yourself with kindness. You will not make yourself do better or feel better by beating yourself up. You will get through this process with patience and time. How knows? You may even reap some positive, unintended benefits. For example, time you would have spent watching cable could be used to start a new exercise program, to enjoy loved ones more, or write the great American novel.

Of course, each circumstance is unique, but there are some things, or a combination of things you can do to find the relief you deserve. Following are a few suggestions you might consider:

• Tap into your 401k – this option is for extreme circumstances such as facing foreclosure or eviction.
• Sell your car- explore public transportation if your city has a good system. If not, consider carpooling, biking or purchasing a cheaper car. Use the bulk of the sale proceeds to retire some of your debt.
• Write down all of your income and expenses – you will be surprised to learn how much money you can save by planning and monitoring all expenses.
• Review your policies – your life insurance may have cash value that you can borrow in a pinch. You may be able to increase deductibles on car and health insurance to reduce your monthly payments. If you elect this option make sure that you have a plan in place to meet your deductible in the event of an accident or illness.
• Contact creditors – you may be able to negotiate settlement agreements or reduced interest rates.
• Consider calling Consumer Credit Counseling Services – This agency can work with you and your creditors to establish a repayment plan. They are often able to negotiate reduced interest rates and allow you too make one payment, which is then disbursed to your creditors. There are some agencies that are organized to help and others to capitalize on your circumstances for their financial gain. Make sure you can tell the difference before you make a commitment.
• Explore alternative housing options – Can you move in with friends or family while you get your finances in order? Or could you rent out a room to earn a little extra income?
• Find ways to earn more income – if time makes a second job impossible, perhaps you could organize a yard sale, income from an EBay venture or another enterprise that allows some flexibility. Such ventures might include baking cakes for the local coffee shop, doing some consulting, or crafting for the weekend bazaar.
• Spend purposely – your primary goal right now is to bring income and expenses in line. You cannot do this if you spend without a budget and a debt reduction plan.
• Look for ways to save a dollar – dollars add up and each one you save can be used to reduce expenses. Ideas include:
  
1. Use dial up instead of dsl
2. Discontinue cable or some/all of the premium channels
3. Stop newspaper, magazine and health club memberships and subscriptions.
4. Maintain your car to save on gas, ride the bus or carpool if and when you can.
5. Clip coupons; make a list and shop in season. Buy in bulk or join a warehouse such as Sam's Club .
6. Restrict dining out to once each month and use a 2 for 1 coupon when you can (skip the wine and dessert to really save big). Better yet, start a potluck supper club. You can get out for an evening and stay on budget.
7. Trade off childcare with another parent to save on babysitting costs.
8. Have the local utility company come out and give you tips for energy efficiency.
9. Review your budget for additional cost cutting ideas.

When expenses outweigh income it is important to remember that you have the tools and talent to turn the situation around. You may be able to use your talent to earn extra income or seek out the tools you need to get back on track. Your current situation need not in any way be indicative of your future one. Begin planning today for sound financial health tomorrow.