It’s a really tough realization to face, but if you just can’t afford all of your expenses and you are barely making ends meet, then the best thing you can do for yourself is to let something go.
Letting go can mean downsizing your home, moving into an apartment, or giving up a car.
Whether you are going from larger to smaller, or just eliminating the item and expense altogether, the transition will be painful, but in the end, it will also be freeing.
Time To Let Go?
But how do you know when you’ve reached the point where you need to free yourself, or are just struggling through a tough spot?
The first thing you need is to write down a true representation of your budget. This will include all loans, credit cards, medical bills, monthly payments, utilities, clubs, food, and clothing expenses.
The next thing you need to do is to measure this against your income. If it does not balance out, you need to let something go. But what?
Some Expenses That Could Go Away
Your clubs and memberships should be the first thing to be cut, but don’t cut all of the fun out of your life. Look for memberships that you don’t really use much like the gym membership, the shopping club, and the Internet website memberships.
Your credit cards need to be put on hold if you are paying them interest just to be able to use the cards every month. While your credit score may take a bit of a hit when you cancel or arrange a temporary arrangement with your credit card company (like re-aging a home loan), this may allow you to spend your money more responsibly and pay down a few other debts.
Your car is very difficult to let go, but if a disproportionate amount of your income is going toward car payments, you may want to consider selling your car and getting a less expensive model. If you have 3 cars in your family and only 2 drivers, the decision to get rid of one car might be easy. If you have 2 drivers but can’t afford 2 cars, you may have to sacrifice convenience a bit, but losing a car is better than losing a house.
Your home is a very difficult thing to let go. But if you don’t make enough to pay the mortgage and take care of the house, you will only make yourself miserable. Now, if you can take a second job for a year to get through a rough spot, it might be smart to hold onto the house. However, if you don’t see any light at the end of the tunnel, you will want to sell, downsize, or even rent out your home to someone who can afford it while you rent a smaller one.
In the end, if you choose to let something go, then you will have much better control over your debts and you will eventually find a comfort zone that you can live with — day in and day out. Remember, every little bit helps.
I have been a certified tightwad since I became pregnant with my first child and decided to find a way to stay home with him. I enjoy sharing my experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.