NDSU Extension Service - Ramsey County

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No Dollars for Budgeting

No Dollars for Budgeting

Budgeting can be difficult under any circumstances, but even more so when you short of cash. If you are consistently short of cash it is likely that you don't follow a budget that reflects your earnings. Smart budgeting prevents eviction, increased credit card debt, and ruined credit scores.

Start taking charge of your finances by requesting bill extensions or payment plans.  Most creditors will accept a partial payment rather than beginning foreclosure or repossession procedures.

Review your credit card payments and due dates. If you are only making the minimum payments on your credit card(s), you are flirting with a disastrous credit score. And, avoiding credit card payments will only worsen your debt.  For example, suppose that your minimum payment on a $1,000 balance is $40. You fail to pay $40 on time, so you are charged a $35 late fee. In addition, your interest on future charges is charged at the default rate of 25%. Now your credit card is even more difficult to pay off.

Online banking and online budgeting software are great tools that can help you categorize spending so you can make adjustments. For instance, with online banking, with a few mouse clicks you can categorize your money for expenses, such as dining, food and utilities.

Look at eliminating unnecessary expenses.  Do you need to cut back on coffees? Or movies? Or do you often have spoiled groceries? All cutbacks should start with items you wouldn't miss, such as switching car insurance companies to get a cheaper rate, or reducing your fresh food purchases if you find food spoiling before you can eat it. Eating out is even more costly, so examine how much and how often you really need to do this.

Once you've made some positive changes, monitor your progress by journaling for one month. You can do this by noting everything you spend in a notebook, budgeting apps on your phone, or with financial software. How you track your money isn't as important as how much you are tracking. Focus on ensuring that every cent is tracked by dividing your expenses into categories, such as rent, food, clothing and utilities.

If, after journaling for one month, you've found your budget isn't where it needs it be, prepare to make further changes. Look at how much you are over budget and decide where you can cut. Don't rule out items that are viewed as basics, such as groceries, utilities or rent. Cooking from scratch can eliminate the cost of pre-packaged foods, and opting for generic brands over brand names will equal big savings on a cart of groceries. Utilities can be reduced by turning off lights when you leave the room or using a lamp instead of elaborate track lighting.

If your current budget doesn't balance or you're barely scraping by, you may need to look at working overtime, getting a second job, or possibly getting a new, higher-paying job.

When you're short on cash, a strict budget is your best tool for correcting your situation. Employing sound money management can mean the difference between financial disaster and financial stability.

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