If you find yourself thinking, “I can’t pay my bills,” then it’s time to sit down and take a serious look at your finances. There are really only two ways that you can get out of the red and back into the black: You either have to make more money or you have to lower your monthly expenditures. Here are four suggestions for how you can overcome your current financial difficulties by following one of the two routes mentioned above.
1. Get Out of Debt
If you find yourself saying “I can’t pay my bills” each month and you are in any kind of debt, paying off that debt should be your first priority.
Which debt should you pay off first? Different financial gurus have varying opinions on this matter. According to author and radio talk show host Dave Ramsey, you should pay off your smallest debt first. He believes paying off one debt gives you the confidence and the momentum you need to tackle larger debts.
Blogger Adam Baker of ManVsDebt.com suggests paying off the debt that has the greatest emotional impact on you. For example, you might owe your Uncle Mike $1,500. Although that loan has no interest on it and may not be as small a debt as your department store credit card, it may be the debt that simply bothers you the most.
Other gurus suggest that you pay off the debts with the highest interest rates first as these debts often cost you the most money over time.
Regardless of whose suggestion you take, make getting out of debt one of your top financial priorities.
2. Take a Close Look at Your Spending Habits
One point that virtually all the financial gurus agree with is that you can’t get ahead financially if you have spending habits that will sabotage your efforts. For example, a 2011 article on BusinessInsider.com pointed out these alarming facts about credit card usage in the United States:
- The average debt per cardholder in 2011 was more than $5,000
- 2 to 2.5 million Americans seek help from a credit counselor in order to avoid bankruptcy each year
- 1 person in 10 has 10 credit cards or more
If any of the above statements sounds a little like you, it’s high time you start thinking hard about how and why you’re spending your money. Is it possible that your “I can’t pay my bills” grumbling is really an excuse for poor spending choices in the past that have led to overwhelming bills and debt in the present?
A good question to ask yourself is what would happen if you suddenly came into money, such as by winning the lottery. Many lottery winners go bankrupt. Their difficult financial straits before they won the lottery was due to their poor spending habits; getting a lot of money didn’t change those habits, so they blew through the money they won all too quickly.
Put yourself on a budget and train yourself to actually stick to it. Once you are used to living within your means, you won’t get back into debt when you finally get out.
3. Take a Second Job
If you cut your expenditures down to size by getting out of debt and changing your spending habits, but you still don’t have enough money to pay your bills, then you need to make more money. One way to earn more is to take a second job.
The aforementioned Dave Ramsey is so fanatical about eliminating debt that he suggests people should be prepared to do whatever it takes in order to get out of debt. “Whatever it takes” includes taking on a second job even if that job is delivering pizzas on the weekends or mowing your neighbors’ lawns.
4. Consider a New Career Path
Finally, if even a second job doesn’t bring in enough money to allow you to live comfortably, it’s time to think about a new career path. Even though you may not want to go back to school, earning that college degree or earning a second degree might be your best option for a brighter financial future.
The good news is that going back to school in the middle of your life is easier than it ever was before. Online universities and night schools allow you to work on your college degree without having to quit your present job. Yes, life might be tough for a few years as you work on earning your degree while simultaneously working full-time, but the alternative is to live for the rest of your life stressed out about not being able to pay the bills.
Think about which of the four options above make the most sense for you financially. If you have very little debt and are diligent about sticking to a budget, the problem might not be your spending habits, it might be that you simply need to enhance your education and pursue a better job. If, on the other hand, you have a good job but find yourself drowning in debt, then it’s time to think about your current spending lifestyle and start putting those credit cards in the freezer.