Fixing a Budget that Spends More Than We Make – How to fix a budget when it feels like there is nothing that you can do. Don’t worry, I’ve got the answers for you!
How many of us have worked with a HUGE deficit in out spending over our saving? Spoiler: it’s everyone. Seriously.
At some point in all of our lives, we finally decide to take the hard step and analyze our budgets and spending. And that’s when it gets real.
You have to look at that expenses number that FAR exceeds your income. There’s no hiding from it anymore. The reality is right there: you are spending way too much more than you make.
If this sounds like you, PLEASE take heart. Know that you are NOT alone.
By now you know that I am frugal/ cheap/ thrifty… (whatever you want to call it). But it wasn’t always that way. I would regularly go to the grocery store and spend hundreds of dollars on food, only to get takeout the same night. We spent $1,200 on food each month for just 2 people!
Before we knew it, the tiny paycheck that my husband brought in was gone. We had too much month at the end of our money by, not just a day or 2… but by WEEKS. The savings account that I had built from the time I was in high school was almost empty, and I had no idea why.
Related Post: How to Live on One Low Income
Next thing we knew, we were drowning in bills. We were fearful that our electricity would get cut-off or our car would get repossessed. There was a point in time when we were living off of beans and rice because I couldn’t afford to buy groceries.
Finally, we decided to get serious about our budget to get us out of that situation. But before we could do that, we had to face the reality of our expenses.
That day came, and I will never forget that shock.
I figured that we had been spending more than we were making, but the extent of our spending completely floored me. I remember doing the math over and over and over to make sure that it was right. Because there was just no way that we were spending almost 150% of what we were making.
But it was true. I sat there looking at the numbers. My husband made $700 every 2 weeks, but we were spending $1,000 every 2 weeks. No wonder the savings account that started the year with more than $10,000 was almost completely empty!
The number hurt my head. It broke my heart. And I sat there, stunned and confused for quite some time. I cried for the brokenness of the situation.
I cried for the brokenness of the situation. I cried knowing that the only reason that we were still paying bills at all was that we were destroying my savings account.
Finally, I knew that a change needed to happen.
It was then and there that I decided to get control of my money. We rebuilt that savings account that was destroyed. We then bought a house on our own. Now, those days of worrying about the electricity getting shut off are in the past.
Not because of a change in income, but because of a change in the way that we viewed money.
Money is a tool that is going to help get from Point A to Point B. That could mean that money will help you get from deeply in debt to being debt free. It could help you get out of the shady apartment that you’re living in, to buying your first house or renting a better place.
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Which is why I’m so pleased to have the opportunity to help out my readers with their budgets to help them get out of their situation and get control of their money.
I have the chance to walk through one of my very dear reader’s budgets. For the sake of anonymity and ease for us, we’re going to name her Beth.
Any tips on saving money or at least being able to pay our bills?
Our rent is $1,200. Phones are $256. Car payment is $408. Utilities are about $300 a month. The groceries we try to keep at $550 a month for a family of 4. And then gas for the car is $200 a month. My husband is only bringing in about $2,200 a month and I stay home. I want to keep staying home with our kids. And we want to be able to get a house someday. Help!
First thing’s first when it comes to fixing a budget that spends more than we make: we need to talk about your other expenses.
Do you go out to eat? Do you get new clothes each month? What about getting lunch for your husband – does he take lunch to work or does he buy it?
These little expenses that we don’t even think about including in our budgets really do make a big difference in the end! Even if he’s spending $7 each day at work on lunch, that’s more than $140 each month!
These all add up and can really make a big difference.
Next: let’s talk about where you can trim your current reoccurring expenses.
You have a VERY high car payment.
That’s a big thing right off the bat that I think really needs to get cut back. How much longer do you have on your loan? Can you sell the car for the remaining amount of the loan?
Getting rid of that expense and getting a car for more than half of that price would really help free up some extra money. Ideally, you’d want to pay cash for a car, but this is an issue of getting that car sold quickly, so we don’t have the time to wait for you to save money right now.
If you can for a while, be a one-car-family. That will save a lot of money. Even if it’s just for a few months, that kind of sacrifice will help you save a lot of money very quickly.
Related: Used Car Buying Guide
Your phone bill is also very high.
I recommend looking into a less expensive plan or changing companies. If you’re still under contract with your current company, you can always call them and talk to someone about how you are having trouble paying your bill and asking if they can help you lower your bill.
More often than not, they will do a lot to help you. They want you to still be their customer at the end of the day, so they will help as much as they can.
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Next, is your rent.
Since every location is different and rental prices can vary all over the place, it’s important to note that this might be a “good deal” where you live. But I still want to encourage you to try to find something different with lower rent.
Even if it’s just lower by $100, that’s an extra $100 each month that you will save. Even if it’s just for a year, moving to a place that’s just $100 less expensive will save you $1,200 annually!
Try to find a place closer to where your husband works so that it will be easier when you need to use the car for the day. It will also be easier if he decides to walk or take up biking to work.
Next: your food bill.
Your $550 for a family of 4 is actually not too bad. Congratulations for that! 🙂
My concern is to make sure that this number covers ALL areas of your food spending: groceries, dinners out, lunches at work, etc. If that number does, in fact, cover all of those areas, then we’re in good shape.
But most likely, this just covers grocery store trips. Which is still ok, but we want this number to be the only amount that you spend on any food at all.
Your grocery bill should be $100 per person per month. So your grocery bill should be around $400. But for not really focusing on keeping your spending under control, $550 isn’t too bad. But we’re going to work on that some more.
Related: Best Money Saving Apps You Need
Lower that grocery bill even more.
I also HIGHLY recommend using Ibotta every time you go to the store. You earn cash back each time you go shopping and it makes a huge difference over time. You can also stack cash back coupons with all of these different apps if you use them all on the same receipt. I’ve stacked Ibotta and Checkout51 to get cashback on the same receipt. Double win!
To get an even lower overall bill at the store, it’s time to shop around for different grocery stores. Aldi and Costco are my favorites because of their low prices, their amazing generic brands and quality, and for their selection of healthy options (like organic produce) for a low price.
I skip stores like Whole Foods, Wegmans, Trader Joe’s and other similar places. I just can’t justify the cost for the products when I know that I can either make them on my own at home or get similar products from Costco and Aldi for a tiny fraction of the price.
Finally, let’s get you and your husband working on a budget together.
Budgeting is hard work, but it’s worth it! There are some great ways to talk with your husband about money without getting into a fight:
- Go to a neutral location.
- Bring cold hard facts in bank statements, credit card statements, car loan information, and any other place where money is spent.
- Bring paychecks and other sources of income.
- Keep cool – no name calling or blaming.
- Create a goal together.
- Do the math: Add all expenses, add all income, subtract the two.
- Find areas where you can each make sacrifices in spending.
- Stay committed to being a team.
Remember that money issues are regularly the top cause of divorce. Don’t let money divide you. Work together as a team to make a budget that will work for you both.
Bring in some extra money.
As you start to dig deeper into your budget, you might realize that the best thing to do is to also add some more income into your bank.
There are some great ways to do this from home:
- Make Money Freelance Writing
- Start a Home Daycare
- Make a Full Time Income From Home Proofreading
- 7 Survey Sites that Are Actually Worth It
- Pay for Back to School Watching Videos
- Review Websites, Get Paid
- Secret Shopping from Home
- 5 Side Hustles That Pay For My Groceries (and More!)
- How to Start a Profitable Blog the Right Way
There are plenty of other ways to bring in some extra money from home, but these are my personal favorites. Depending on the amount of time that you have available to you and the kinds of skills that you have, you may be able to bring in a part-time or a full-time income from home. But in your current situation, I HIGHLY recommend avoiding any kind of MLM at all costs.
And, above all, remember that YOU can change the situation that you are in.
Remember that we’ve all needed help at some point in fixing a budget that spends more than we make! If you need to throw yourself a pity party for a little, that’s fine. But once you’re done, get up, dust yourself off, and make the tough changes that will make a difference.
There is no one else who can do the work for you. You are the only ones (you and your husband) who can make the changes in your life.
Yes, these are tough decisions. Yes, they are going to stress you out and make you want to quit.
But don’t lose sight of your goals. Your financial situation won’t get any better without you doing the hard work. Keeping those goals and those dreams of a better future alive will help you when you want to quit.
I believe in you and I know that you can do it if you just commit to doing the work!
What do you do to keep your budget under control?