NDSU Extension Service - Ramsey County


| Share

Why Budget Zero Dollars?

Why Budget Zero Dollars?


When checking account is as empty as your cupboard, budgeting dollars you don’t have may seem to be an exercise in futility.  But that type of situation is exactly when you need a budget most! Financial woes usually mean we are not following a budget that reflects our earnings.  Smart budgeting reduces stress, prevents eviction, prevents increased credit card debt, and ruined credit scores. When your total is zero, consider the following financial steps.

Avoid Immediate Disasters - Request bill extensions or a new payment plan.  Keep creditors informed of your status and intentions to pay them.  Review all your bills to determine what must be paid first and then set up a payment schedule based on your pay days. You will want to leave yourself some catch-up time if some of your bills are already late. If this is the case, call the bill companies to see how much you can pay now to get back on track toward positive status

Review 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. However, avoiding credit card payments will only worsen your debt.

Review Your Past Month's Spending - Online banking and online budgeting software 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.

Eliminate Unnecessary Expenses – Lunches out? Morning coffees? Cable TV?   All cutbacks should start with items you wouldn't miss, such as reviewing car insurance policies to find a lower rate, or reducing your fresh food purchases if you find food spoiling before you can eat it.

Seek out New Sources of Income - If your current budget still won’t balance, you may need to look at working overtime, getting a second job, or possibly getting a new, higher-paying job.  

As Soon as Possible, Set up an Emergency Fund – At first, any extra money beyond bills, minimum payments, and an emergency fund, should go towards paying down your debt.  After paying off debt, start with $5 or $10 but begin to set aside dollars into an emergency fund.  Save until you have at least $500 that could be used for a medical emergency or to fix a car when it breaks down without having to put the emergency on a credit card. An emergency fund can often save a budget when you are working on a low income.

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.

Creative Commons License
Feel free to use and share this content, but please do so under the conditions of our Creative Commons license and our Rules for Use. Thanks.