Leslie from Rhode Island asks:
Where do we begin to catch up on debt when we are behind three months on every day living such as mortgage, car payments, and utilities and IRS payments?
Jill: It is hard to give specific answers to your question without knowing more details about all of your finances. Here are some general suggestions about a couple of things that you mentioned. Some of these ideas may seem drastic, but if you are three months behind on everything including the IRS then you need to take a very honest and serious look at your spending habits.
In order to catch up on past due bills, you not only have to live within your income, you have to live below your income. It may be painful, but you have to figure out how to live below your income at least long enough to pay the past due bills and then to keep current on all of your bills.
If you can’t keep up with your mortgage, then no matter how much you love your home you may have to sell it for something less expensive. The same goes for your cars. You could try to get by with one car. That may not be as impossible as it sounds. My son and his wife both work and often only have one car. She found she could switch to evening hours at her job for a while until they could get another car. One spouse may have to take the other to work for a while. This may not be convenient, but declaring bankruptcy isn’t really handy either. Besides, if you declared bankruptcy and still spent more than your income, you’d end up with the same problem all over again. You could also sell you cars and get less expensive/used cars with smaller payments.
Cut back on utilities as much as possible. There have been times where I couldn’t run my air conditioner or I just used it when it became unbearable. Notice that I said unbearable, not uncomfortable. There’s a difference. Stop watering your yard. If your lawn dies, it dies. What would you rather have? Bills that are paid, no financial stress and a dead yard or lots of debt and stress and a nice green yard? I know it seems like there is no way out but it really is doable. Remember, you can’t spend more then you earn. Start thinking about each item you buy. Is that item really a need or just a want? Most Americans have a difficult time telling the difference between needs and wants. Do you really NEED it or do you just WANT it?
Cell phones are still a biggy. I was talking to a woman who was frantically trying to keep the creditors at bay. She said I just don’t have another place to cut back. I said what about your cell phone. Boy the look of horror on her face. We all insist we need a cell phone and they are nice especially in an emergency but that isn’t the reason most of us have them. We have Smart Phones because they are a fun toy for us to play with and to use to interact on social media. You can get an inexpensive little phone that doesn’t have all the bells and whistles to use for an emergency.Here’s a new concept for some to try – visit with your neighbor or friend eyeball to eyeball instead of texting all the time. Much cheaper then paying for an expensive phone. I know, I can’t believe I even suggested such a thing but hey if your are really serious about saving you will do it.
If you often wonder where all of your money goes or if you need a more frugal mindset, check out Dig out Of Debt and learn more about how to keep more of your money.
Should We Declare Bankruptcy?
Always, always, always know the difference between a need and a want. Lots of wants are masquerading as needs, and no doubt, they would be nice to have even if they are modest, but when you get down to it, they are still wants. I suggest people talk with others who have been through really hard times, and have frugality down to a fine art without apologizing for it. Those raised during the Depression, the people on this web site, and Jill’s books are examples of these people. I don’t know how many times I have heard others say that someone “can’t live like that”, when in fact countless people do, for the long haul, and many do not feel deprived. An example of this is when I finally made an appointment to have my hair cut and styled at a hairdresser’s shop, about 15 years ago. The hairdresser asked me when was the last time I had my hair done in a shop. It was only then that I realized that I had cut my hair in a shop when my daughter was 6 weeks old. That daughter was 18 years old when I was asked this question. I had found friends and family to trim the bottom of my hair for 18 years, while I grew it out, to save money for more important things. This incident made me think of a friend of mine who regularly had money problems, but also regularly got her hair done (along with her daughters) 3 to 4 times a year, in a shop. It is a real treat to get your hair cut and styled in a shop, but if you are having trouble making ends meet, that hair appointment, lovely as it is, is a want, and not a need. You must stop looking at credit cards and all other forms of credit as “disposable income”. If you do not have the money for something, you cannot buy it.
So true Mary Jane. Tawra and I were talking this week while she was doing her nails about how so many people don’t know how to do a good job at painting their nails because they don’t do it themselves but think they have to have them done. Take that one step farther and there was a time when I didn’t even have the money to buy the cheapest polish to do them myself. I kept them neatly filed and clean and I even lived to tell about it.
One of my favorites is we never went to have a perm done years ago. You always bought a box of perm at the store and did it yourself. What is even funnier is it use to be very complicated and a pain to do. Now the perms are 90% easier to do and yet we pay big money to have it done. The excuse too that home perms don’t turn out is an excuse because I have more perms that I went to have done (and that wasn’t too often) not turn out as home ones.
My sister used to say she could NOT live like my husband and I do (very frugally) until she ended up divorced and was forced to live our way. The thing is, she never really learned to be frugal and my brother ended up paying off her $25,000 credit card debt so she could manage her other household expenses (which she still could not do). We meanwhile, with debt, managed to buy a home and a new car. (I know you say not to do this but we only buy Subarus which last for years ((we usually keep them at least 12 years and have low mileage on them when we trade them in.)) For years my sister has bought used pieces of junk that last a couple of years then have to be dumped. My point is, never say never, live under your means and don’t be ashamed to live this way, which I think she is. We live so well that people think we have money. Oh! If they only knew.
Here are some more ways to save:
1) Dye your own hair. It cost me $9.50 for dye from Sally’s Beauty Supply (I need ammonia free). It was costing me $35 which was pretty cheap to begin with. I also had to pay a tip. I trade with my aunt, she does mine, I do hers.
2) Cut your families hair. I have done this for years. An inexpensive set of hair clippers will pay for itself the first time you use it.
3) Trade babysitting. I watch 5 kids on Thursday’s. But I have 2 days a week to work etc. without paying a dime for sitting costs. There are 3 mothers involved with this trade. We each take one day. These people need to be dependable especially if you are scheduled for a shift at work.
4) Urban forage. I very politely ask my neighbors for fruit that is literally rotting in their yard. Do not go picking fruit without permission, it’s stealing and trespassing. I have foraged apples, grapes, pears, cherries, chokecherries….the sky is the limit. Please be careful to pick up any leaves or fruit that you drop etc. They don’t need you making a mess especially when they are so nice. It also helps to offer to bring them say jam or banana bread as a thank you gift. My pantry is well stocked with this totally free food. I did have to pay for canning lids, pectin(buy in bulk on Amazon), sugar etc., I still saved a bundle even buying the ingredients to process my goodies.
4) Make your own stock. I save veggie scraps in a gallon freezer bag until its full and then boil it with salt in a large stock pot. I got 5 jars for the freezer the last time I did this. It was literally destined for the compost heap or garbage can.
5) Recycle old crib sheets into cloth napkins. My kids love their Pooh Bear napkins that we made from when they were babies.
6) Take your kids gently used items to a consignment store in exchange for store credit. It’s usually a higher percentage than cashing it out. You will get to get kids clothes for free, yes I said free! That way you don’t have to sit like a chicken hatching your eggs at a yard sale for 3 days. They will get much more for the clothes than you would at a yard sale. Plus you are boosting your local economy. The key is not letting your kids drink or eat in clothes that you would like to sell. Come home from church and make your kids change before they have lunch.
7) Buy clothes in gender neutral colors so both kids can wear the clothes.
8) Go for a walk with a garbage bag (reused grocery bags) and a gripper grabber and pick up recyclable items like cans or bottles. You get exercise, clean your neighborhood, and get to make a little spending money. Look for adds in local newspaper for days when they offer a higher dollar amount for recyclables.