Are Your Finances Out of Control - picture of man holding out empty wallet
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Are Your Finances Out of Control?

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Feeling as though your finances are completely out of control is a troubling, yet, all too common issue for many people. No matter where you look, it appears the vast majority of us are struggling in some way.

While some of us are suffering under the weight of ginormous car payments, others are trying desperately to pay off student loans while still having money to live. Meanwhile, an entirely different demographic is just sucking with money in general by living a lifestyle they cannot afford. For the record, I know people in all of those categories. And, unfortunately, most people whose finances are out of control aren’t doing what is required to turn things around.

5 Steps to Get Your Finances Under Control

If you’re in the minority and actually want to make a change, here are some steps you can take to dig your way out.

Learn to live within your means.

In simple terms, you should not spend more money than you earn. While that may sound like a crazy concept here in good ol’ America, living within your means is the best way to avoid debt and live a financially comfortable lifestyle. To figure out what your “means” is, you need to figure out how much you bring home after taxes every month. Then, simply subtract your basic monthly bills and expenses. What’s leftover is what you can afford to save, and if nothing is leftover than you are living above your means already.

Track your spending.

As I have mentioned many, many times, tracking your spending is the key to making a permanent change. It pays to be horrified by your own financial waste, but the only way you can confront it is to track your spending and see for yourself. To track your spending, break out the last few month’s bank statements and tally up the totals in all of your main categories. For example, see how much you’re spending on cable television, entertainment, dining out and groceries. What you discover might shock you.

Create a monthly budget.

As you probably know, I’m a zero-sum budget enthusiast. Zero-sum budgeting is a type of budget that uses last month’s income for the following month, and requires you to pay savings and debts as if they were bills. While you don’t have to use a zero-sum budget necessarily, a budget of some kind is extremely helpful to almost anyone. Even though many people cringe at the thought of living under the rule of the dreaded “B-word,” budgets are actually a valuable tool. Instead of thinking of it in a negative way, think of your monthly budget as a method that helps you get what you really want out of life. Because, when you’re budgeting in order to waste less and save more, you’ll have more money for the things you really want.

Build an emergency fund.

Can you really afford an expensive emergency? If you don’t have an emergency fund, then the answer is probably “no.” Even worse, not having an emergency fund is one of the most common ways people wind up with a huge mountain of debt. Because, when a financial disaster such as a job loss, major home repair, or unexpected illness or medical condition strikes, people are forced to use credit to keep the lives afloat. With an adequate emergency fund, on the other hand, you’ll be prepared.

Find ways to earn more money.

No matter who you are and where you live, there are ways to earn more money. While most of them won’t be ideal, you do what you have to do, right? Some ways to earn more money can include:

  • Freelance writing. Learn how to get freelance writing jobs and complete them from the comfort of your own home.
  • Become a virtual assistant. Use online sites like Elance.com to find easy work-at-home jobs you can do on the computer.
  • Take surveys. Sites like UserTesting.com let you earn money taking surveys online while you watch TV..
  • Give plasma. When Greg and I went to give plasma several years ago, they were offering $80 for first donations.
  • Sell stuff you no longer need. While I once sold a lot of our old stuff on Craigslist, I now use our neighborhood and city Facebook page to unload my unwanted stuff. Either option is a good one, and we all have stuff laying around that we no longer need.

The Bottom Line

Are your finances out of control? Only you can make the changes required to turn it all around. Fortunately, with the right attitude and a certain amount of follow-through, you can start living the life you really want.

Have your finances ever been out of control? What did you do to change them?

See also: 

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32 Comments

  1. I’m totally the student loan debt portion of your story – no money to spare here. Yet, I totally just quit my job, too. After people reign in their spending and get on a budget – think outside the box regarding profession or secondary income. Bet you’ll find something you LOVE doing and doesn’t even feel like work 🙂

  2. It’s scary how quickly this kind of thing can catch up to you. All you need is one hiccup while being on that razor’s edge and you’re screwed. The Emergency Fund (even if it’s small to start) does two things – it gives you peace of mind and it lets you realize that you’re capable of saving money instead of spending it! Great advice!

  3. Tracking spending was a huge eye opener for us. I can’t imagine now not knowing where my money went, but it was reality for a long time.

    1. Same here! We knew we were wasting money but had no idea how much until we actually tracked it.

  4. All great tips to help someone figure out and then correct bad money management. Very simple tips anyone can implement to make a HUGE change in their lives. All 5 tips help build margin – the margin needed to do more of the things you want to do and less of the things you don’t.

  5. We were incredibly relaxed about paying off our student loans for the longest time, thinking that they would just get paid off eventually. Thank goodness we finally woke up and realized that if we let the student loans hang around that long we would end up paying thousands in extra interest. Now we are in turbo debt repayment mode and on track to pay the loans off in 2016!!

    1. We did the same thing. I made $150 student loan payments forever. But those ended up in our debt payoff plan eventually, so we killed them at the end in one fell swoop. Be gone, student loans!

  6. I’ve been there and followed these steps to gain control. The key to remember is that you didn’t get into debt overnight and you won’t get out overnight. Be patient and have a plan.

    1. So true. It takes time! Unfortunately, getting out of debt isn’t nearly as fun as getting in =)

  7. I’m watching so many of my 20-something friends struggle with the concept of living within your means. Stuff is not a measure of success, but boy has society convinced us otherwise! Tracking your spending and really inventorying what you have and why can really shed some interesting perspective on spending and saving.

    1. I hear ya. That’s basically everyone I know too. Or actually, most people I know are living to the very edge of their means where one huge emergency will wipe them out.

  8. Tracking our spending makes all the difference for us.
    That’s incredible about plasma donations!!

  9. All great tips Holly! It was the spend tracking that did it for me. It opened my eyes, well I sort of knew already but I loved to avoid it, to the spending I was doing on stupid useless stuff. The rest of the change flowed out from there. It was difficult at first, and will be for anyone, which is why it’s so important to focus on taking those first small steps you can build on.

  10. I actually just started tracking my spending after years of avoiding it. Good grief…..Last month I spent $300 on dining out. Granted, we did some traveling, but still. I definitely see some areas where I need to improve. Student Loan debt is eating us alive. The payments are MORE than our monthly rent and our income is only slightly more as before we started college. Ouch. Tracking spending is really the key. No matter how much stuff you sell, or extra income you pull in, if you keep spending it , then you never really get ahead. It takes a lot of discipline and determination. I even have a successful side job and we still have almost zero money left after each paycheck.

  11. Shirria @GDTH says:

    Since the amount of debt became a reality recently, we are at the bottom of what appears as a bottomless pit of debt. However, we have taken most of the steps listed above (except donating plasma) and I gain relief knowing that I will eventually see the light at the end of the tunnel.

    Great advice!

  12. “Find ways to earn more money” has been a big focus for me over the past few years. It’s amazing how many opportunities there are to generate supplemental income if you’re willing to put in the work.

  13. Yes, living within your means is very important. Paying for a trip you took last year or a meal you had last month is no fun. No matter how much we think we want it now, it’s never worth it when you are paying for it in the future.

  14. Whenever my finances get a bit out of control I always go back to my budget and trim the fat. I find that after a month of eating out excessively, I can tell myself that I won’t eat out for the next month as a re-set. Same goes with clothing, entertainment, etc. Sometimes I need a “fast” to re-set my spending and get back on track with more balanced behavior.

  15. Track your spending is a key because that allows you to make sure that you spend less than you earn. That’s the number one key to get ahead in finances IMO.

  16. Creating a budget and tracking your spending is so important! I’ve found it so much easier to change my spending habits when I can see where the money is going each month. Maybe it’s just me, but a visual to go along with my credit card bill is so helpful!

  17. Yes to all of these! Living below my means, tracking and budgeting my money, and getting extra gigs on the side all helped me get to where I am today.

  18. An emergency fund is something I think everyone should have. It can provide peace of mind and help you out when you really need it!

  19. I don’t think my finances have every really been out of control, although I have definitely experienced those “when it rains, it pours” months when everything that can break, does. 🙂 These are all good steps and it may feel like punishment initially for some, but learning to spend mindfully and within your means, ultimately become nirvana for most people.

  20. Great tips Holly! I think when people are making major life transitions or major life events/changes happen they are more susceptible to their finances getting out of control. It’s also the whole “too busy” to deal with finances. I know I felt that way in the past, but it also comes down to priorities. Yes, your new job/house/child/etc. is important but you can’t always use life changes as an excuse for not dealing with your finances. Not sure why that came to mind, but I do think it is a big excuse for many people.

  21. I’m absolutely agree with this post, until I decided that was time for me to became “ADULT” and having a budget my finances was out of control, everytime I was in ATM I don’t watch with attention the amount of my balance, but when I decided to have a budget I started to track every single expenses (I still do it daily), do a monthly budget and control it weekly readjusting some areas and I understood importance of emergency fund (thanks to it and side hustle I didn’t had problems to pay unexpected bills)

  22. Tennille @ Two Kids And A Budget says:

    I think the first thing you have to do is become real with yourself and your situation. Without doing that then you will continue to make bad financial choices. You have outlined some great tips for those who are ready to regain control of their finances.

    Now that my boys are getting a little older and are going off to Preschool I’m looking for ways to add to our families bottom line during the 3 free hours I will have to my self every afternoon. I’m finding that freelance writing will probably fit that bill the best.

  23. To me, the most important step is the first one you have listed: Learn to live within your means. If you do that, then the other steps will be easier and likely fall into place.

  24. Living below my means was life changing for me. Even though I don’t make much, I’m at peace and happy with my lifestyle now that I don’t have to be stressed out trying to obtain something that I can’t afford.

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