By April Sorrow
University of Georgia
I’m having trouble making ends meet. What are my options?If you don’t have enough money to cover your expenses, you have at least three options: increase your income, reduce your expenses or somehow create a combination of the two. Doing nothing is not an option. If you continue to spend more money than you earn, sooner or later you are going to have big problems. The sooner you tackle the problem, the better.
How can I earn more money?Determine if the need for additional income is a short-term problem or something requiring a more long-term solution. If it’s a short-term challenge, find a part-time job, take on odd jobs like babysitting or mowing yards, or have a yard sale to clear out items you no longer want or need. For a more permanent solution, consider returning to school to earn a degree or gain additional training that will lead to a higher-paying position. A home-based business may be another option.
How can I reduce my expenses?Think before you spend. If you live from paycheck to paycheck, pay close attention to where your money goes. Most families can reduce spending by as much as 20 percent without feeling much, if any, pain. Carry a notepad and write down every penny you spend. At least once a week, add up how much you spent and what you bought. Little things, like buying snacks from vending machines, smoking, or eating lunch out, can add up to a lot of money in a month’s time.
How can I cut back on monthly bills?Shop around, regularly, for everything ¬— insurance, utilities, telephone service (including cell phones), Internet access, credit cards and other goods and services. The cost difference from one provider to another can be astronomical. The great deal you got two years ago may no longer be the best deal, so it is important to recheck at least once a year. And make sure you only pay for what you use. Cancel extra features or services you rarely or never need. Think about targeting one or two spending areas. Brainstorm with other members of the household on ways to reduce spending.
Should I refinance my home loan?If you have excellent credit, owe less than your home is worth, will stay in the home long enough to recover any closing costs, and can find a lower interest rate, then the answer is probably “yes.” The problem for many homeowners is the balance—what they still owe—exceeds the value of the home. With less than stellar credit, obtaining a loan with a lower interest rate will likely be difficult, if not impossible.
What about my credit cards?If you have excellent credit, carry a balance and pay more than 14.9% APR (the current average), contact the credit card company and ask for a lower rate. Currently, consumers with excellent credit can find credit cards with interest rates as low as 6.5% and no annual fee. If you are unsure about your credit history, Georgians can request up to two free credit reports per year from each of the three major credit reporting agencies (Experian, Equifax and TransUnion).
(April R. Sorrow is a science writer with the University of Georgia Public Affairs Office.)