You’ve worked hard and your salary has followed suit. Still, at the end of the month, you don’t have enough to cover all your bills. What’s wrong?
There could be multiple reasons for this and of them all, we selected what we think are the top five…
1. You don’t have a budget
Without a defined budget, you can easily spend your way to debt. In order to prevent this, you should come up with an outline of all your expenses, starting from those you must pay every single month. These include things like rent/mortgage, loan repayments, utilities, internet access, cellphone bill, and an average food cost.
The next step is to list everything else, things you can perfectly live without. These would include your cable TV, subscriptions to magazines and other services, dining out, entertainment and other costs.
Then you should thoroughly look at that list and see where you can make the cuts.
2. Your credit card is costing you a small fortune
Credit card debt leaves millions of families strapped for cash year after year. If it means something to you, this isn’t a U.S. problem alone — the whole world is having it.
The important thing is to do the first step correctly (create a budget) so you could find some space for savings. Then, use the extra cash you have to pay off your credit card debt.
If you have to, get a lower interest loan to repay the credit card debt. Or, consider getting a balance transfer credit card. Just make sure to pay off the debt while you’re in an introductory 0% APR period. (Related: 5 Steps to Paying of a Credit Card Debt)
3. You’re house poor
Mortgages can be expensive for many. If you’re in the group of people for whom a mortgage consumes more than 25 percent of their income, you may be what is called a “house poor.”
Simply put it, for some folks a mortgage payment alone is too steep to bear, leaving them with little money leftover for bills and other budget essentials.
Perhaps it is time to refinance and rethink your spending habits. Which leads us to the next point…
4. You’re spending too much
One of the reasons may be that you can’t stop making impulse purchases. The other could be that you’re keeping up with the Joneses. Both bad habits.
A good-defined budget that you follow through could help a lot. To put it bluntly, if you haven’t budgeted for some item — don’t buy it. Yes, it will require some discipline (and practice), but it’s well worth the effort.
5. Someone’s draining your income
Finally, if you’re always behind the eight ball with your bills, maybe the problem is in someone else. Perhaps you have a friend who is always a little strapped for cash and you end-up paying his bills on and on.
Or you may be supporting an unmotivated spouse, sibling, or adult child? Perhaps you should practice a little tough love, using the money to cover your own bills before helping anyone else.