…it’s a week until payday and I’m overdrawn. I can’t believe it happened again! I don’t know where all my money went. Can you help me?
I receive emails like this one quite a bit. The diagnosis is simple: Too much month left and at the end of the money. If this sounds like the boat you’re in, you’re not alone. Dave Ramsey says seven out of ten families live paycheck to paycheck. Eight out of ten of upper income earners live paycheck to paycheck. What does that tell you? Most people make enough, they just don’t manage it. If left unmanaged, your financial boat will sink unless you find and fix the problem.
Luckily, the remedy is even simpler than the diagnosis. In fact, the answer is in the above example, “I don’t know where all my money went.” just means their money GPS is broken. They have a tracking problem. The Captain and First Mate need to get together and figure out where their dimes and dollars are dashing off to, before they have to bail into the life raft.
Track your spending. One of my clients was shocked to find out they were blowing $1200 a month here and there. Wow, $1200? That is a pile of money. Since then, the leaks in thier money boat, have been found, patched up and they are floating to financial freedom.
Write it down. To find your leaks, look back at past records or balance your checkbook . If you don’t have records, you may be on the Titanic headed for a iceberg. Start keeping records. Keep in mind those $5 coffees five days a week add up to $1300/year. Eating lunch out at $7 a day during the week is $1820/year. Little things add up BIG time. I’ve found people who frquently use ATMs and ask for cash back when checking out have tracking problems.
Talk to your accountability person about what you are going to change. If that person is your spouse, ask them what they are willing to change to get closer to a money plan. This should be a polite conversation, not an attack or a nagging session. I’ve found those don’t work. A sense of humor always works better for me.
Commit to change just one thing. If coffee is your money stealer, commit to brewing your own for a week or a month. Coke is cheaper by the case. Try taking your own to work instead of stopping by the quick-stop. Pack your lunch or pack your children’s lunch. There is a ton of cheap date ideas out there, try one.
Put your boat shoes on, Captain, you are really close to setting sail. My guess is, you probably make enough, to get out of debt rather quickly (with a few adjustments). We’ll sail into a money plan, next, so don’t throw your tracking sheet away just yet. Your boat is fixing to come in, and guess what? With a little patching, your yatch will prove better than a government life raft. You can do this.
Simply,
Sis
PS Keep the email questions and comments coming to sis@reclaimsimplicity.com
Tags: debt, getting out of debt, money management, personal finance, Simple Money
Hey there,
Loving your blog and loved your blogher comment and can’t agree more about bailout. Although I am not as fiscal responsible as you, I’m trying. I’m also working on that contentment as well.
Nice finding your blog.
Regards.
Scout’s Honor
Hey, thanks for stopping by. Your blog is sweet (hey every body…check it out!)
Sister, you’re welcome here anytime, sit deep and come often. Sis
Just wondering…. If I truely know where every penny is going then what? My brother told me plainly- Get another job…. I can’t do that…. I have two children that need adult supervision…..and daycare costs more than I could make…..I already work full time plus I take on extra after work meetings etc. My husband does too but we are still struggling…..We have some credit card debt but nothing extreme. We are always out of money and what we have to buy is still only what we really need. I have had the same purse for three years, I have not bought anything just because I wanted it….and I try really hard to save money on the things we need… I just don’t really know what else I can do
Sadtruth–You don’t know how often I’ve heard this while working with people and their finances. So after you list EVERY thing. Look and see where your money is going.
The biggest money gobblers are car payments, house payments, and eating out. Lots of people in the Dave Ramsey’s Financial Peace University class I lead have to sell their cars for something they can afford compared with their income. A few were house poor and needed to sell their house. This is a hard realization, but worth it in the long run.
After we sold our truck and bought one for cash. we got on a zero budget we paid off the remaining $12000 in 9 months. Keep in mind this was on one very average income. The thing that helped us most was paying cash at the pump, and grocery store. by using cash envelopes with labels like food, gas, clothing, cleaners…etc…
I encourage you to read “Total Money Makeover” by Dave Ramsey. His plan has helped millions including us. It’s hard, but worth it.
I know you feel helpless and hopeless, but it sounds like you are on the verge of figuring out a solution. Best of luck. Let me know if I can help.
Blessings.
Sis