cruisnfamily said:
Inquiring for a friend who I'm helping do this:
OK, here's my question....what if there is no extra money? Seriously, you've tracked it all and you make less than you spend....what then. Obviously the answer is to bring in more income. OK, you get the part time job and now you have enough money to live but not enough to pay extra to anybody....how do you do the snowball thing then? Or any of these plans. There's no more money to bring in and no more expenses to cut...I guess you just stop using any credit at all and hope in time the payments you make will reduce your debt. Any advice on this one?
The only real nessesitys are shelter, food, and transportation. Everything else is optional. Cancel the cable, if that means no t.v., well, then the electric bill will be smaller too!
Take a look at the food bill, cut out all treats (this helps many to lose weight, too!). Ice cream and cookies are not nessesary. Look at food portion sizes, even. Many (and I'm not saying your friends do) eat way to much food to begin with, if they cut down the portions, meals will last longer (leftovers) or they need to cook less to begin with, either way it saves $$$. Meat is expensive, have them look for meatless meals, have breakfast for dinner (eggs are the cheapest protien out there). Cut out ALL fast food or take out. Bottled water is not nessesary, I don't care how bad your water tastes. It's safe to drink. If you MUST have bottled water, then at least buy the gallon jugs for 69 cents and not the case of idividual bottles for $5 to $8.
Another area is utilites. Unless needed for health reasons or pets, don't run the a/c in the summer. If it is needed, keep it at the highest tolerable level, and keep the curtains and shades drawn, it helps keep the house a little cooler. Turn off all lights in empty rooms, turn the temperature down on the water heater (good safety tip too for families with young kids or older seniors), only wash/dry full loads of laundry (it costs about the same to run 1 small load as 1 big load). To save on water, don't water the lawn (it doesn't die, it just goes dormant) and take the shortest showers possible (also the tip on washing full loads helps with water).
Cars, if they have a payment, they should sell the car and buy the cheapest reliable car they can, use any left over money to pay down debt and/or start an emergency fund. Once the payments stop, that alone will give them extra $$$. If they have a lease and can't get out of it, when it's up they need to then buy a cheap used car, they should NOT get another lease, that's the most expensive way to have a car there is.
After all of this, if it still isn't enough (or they've already done this and are still short) then...
Down size the home, if possible. Even if that means selling the house and going into an appartment that has a lower monthly payment. Use the cash from the sale to get rid of all debt. If any debt is left over, pay that down, and then they can start saving for a down payment again for a new home. This is a drastic step and I would only do it if there was no other choice. But if it is the only option left, it's better this than bankruptcy, which is the only other option left open if they truely have no money and are spending more than making.
The only other option to save the home is to bring in more money. The easiest way is to ask for a raise. If they do good work, why not? Overtime is then the next easiest. If no raise is possible and no OT is available, then they need to look at second jobs. Paper routes, pizza delivery, waiter/waitress/host at a restaurant, making coffee at Starbucks, baysitting, yard work for neighbors, what ever it takes to get that extra income.
It sucks, it really does. But what's the alternative. It's not possible to live and spend more than you make forever, so they need to cut costs and/or raise income. It's the only way.
