Making your money last through the month
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I'm a recent college graduate just getting started out in the "real world." I make about $20K a year and I have about $1500 in credit card debt, $180/month in student loans and other "standard" bills, such as rent, phone, food, electricity, etc. I do not have car payment. Since I get paid only once a month, I'm having a really hard time maintaining a budget. I seem to always find myself nearly broke at the end of the month. I'm trying to keep my savings account intact, so I rarely go into it, but it's getting harder and harder to have any money to put in it. I also want to one day start investing, but right now, I don't have the money to do so. How can I stretch my money throughout the entire month, instead of most of it being gone by the second week?
Lucinda M. in Downers Grove, IL
Best Place to Start
The best place to start your financial makeover is by doing a bit more learning. The following are excellent books to get you started: The Tightwad Gazette by Amy Dacyzyn, Personal Finance for Dummies by Eric Tyson, How to Get what You Want Tomorrow with the Money You Have Today by Carol Keefe.
The second thing I would do is try to share lodgings with someone (maybe even Mom). Pay your share of expenses, and it still will be much much cheaper than living single.
Another source of tightwad ideas is to talk to older people. Most of us remember what we had to do to get by when we were starting out, and we love to talk about our bright ideas and our dismal failures. Needless to say, you can learn from both.
Boost Your Income!
Three years ago, I was in a very similar situtation as yourself, but I was living Washhington, DC. I had a $180 school payment, $700 rent payment, and a little credit card debt. For me, my $18,000 salary was just not paying the bills, and since I was paid the last day of the month, I sometimes had to really look for my bus money!
My solution was not easy, but I took on a part-time job. I am single and have no dependents (my cats don't count with Uncle Sam!). At first I worked three nights a week and weekends. The first job I found was in retail and I was paid every week. This helped especially at the end of the month. At first this extra money was to pay bills. Gradually it became my fun money. I have changed both full-time and part-time jobs. I have moved up the ladder at my full-time job and do not have to work a second job, but have kept my second job. Since I have been there quite awhile, they are very flexible with my hours and I use that money only for travel and fun. I am able to work as much as I desire. My tips for a part-time job include:
- Find one that is very flexible and fits your schedule.
- Don't work all the time and get burned out quickly. Remember you need down time.
- Do something you enjoy. (If you like people, host or work in retail. If not, you may want to try data entry.)
- Just out of college you are used to all sorts of odd hours, so it won't be that difficult.
- Let your full-time job know you are working a part-time job. Make sure it does not interfere with your full-time job. They will see what a hard worker you are and that you are motivated!
Collette in DC
I, too, only get paid once a month. After my husband died four years ago, I found it nearly impossible to live on a once-a-month paycheck. Finally, I figured out a solution that works for me, and maybe it will help you, too.
When I get paid, I add up all the bills I will have to pay that month. Then I subtract that total from my paycheck, and divide the balance by four (weeks). Then each week I allow myself to go to the bank and draw out that weekly allotment. It's tough sometimes, but it's worked pretty well for me.
Two Cost Cutting Moves
For most people in your situation, there are two ways to make a big difference in cash flow. Cut your housing cost by sharing space or moving to a cheaper place, and adding a second job. Most people really resist the idea that they could do more, but most of us could do more. Leverage the job if you can. For instance, wait tables and get a free meal or sell retail and get an employee discount. If you have an entrepreneurial streak, there is a fortune to be made in service. Housekeepers get $12-$15 an hour in my area and handymen are scarce as hen's teeth. Or, if you are a wizard in some particular field, build on that. Consider computer tutoring or sewing and alterations. My extra jobs have included cook, kennel maid, small town reporter, and recreation leader for mentally disabled adults. Mostly I managed to have fun, too. Once you know what you want, where your money goes, and how to get more if you want it, you won't have trouble getting out of debt.
Out of Sight...
I am also a college student and one way for me to manage my money is to have direct deposit from my job. Yes, it is a hassle to go to the bank (once a month) and deposit a paycheck, but I found myself easily making withdrawals from the bookstore ATM and that was how my money was disappearing. By having direct deposit and a list of monthly set payments, I was able to sit down and pay those bills but not "spend" money I hadn't "seen." One can also have the bank do an automatic deposit from the checking into savings account to build one's savings. It's a weird psychological thing, but it works for me and my budget.
Single Budget Cutting
I am assuming Lucinda is single and childless. This is a perfect time to pay off debt rather that saddle a husband or children with the consequences of it. She should find the most inexpensive living arrangements, maybe even bite the bullet and move home for a awhile. Otherwise find a roommate or an inexpensive studio apartmen. Destroy the credit cards and do not accrue anymore of any kind of debt. Set a budget and stick to it. Be realistic about needs and even some wants, but be careful to discern between the two.
Save for special outings or purchases. Eat simple, homemade foods. Shop for most food once a month. Use your day off to check out the grocery store ads, choose inexpensive foods that are wholesome and on sale, and buy staples in their least prepared state. Spend the rest of the day making soups, casseroles, mini pizzas, individual burgers, etc., packaging in single servings and freezing. Save out a little money for milk, fresh fruit and veggies. Having the food handy will help avoid the temptation to run out for convenience or fast foods. They work great for lunches at work also.
Pay all of your bills, and talk to your creditors about changing your due dates to one week after your monthly payday so you know what you owe right then. Set aside money for gas. Put some in savings for emergencies. Then divide the rest into four equal amounts to use through the month. As you learn to be careful with money and come in below budget, use that money to pay off debt faster. The main ingredient in good money handling is self-control that once cultivated will serve you well through life. Our family of 7 has lived on less than $30,000 until recently, and only slightly more now. A single person can live on very little and should eliminate all debt and begin saving for a future. This is the time to accumulate a good running car, appliances, etc. to allow freedom in the future to live on one income. Selfishness and a desire for self gratification can bind a person to debt and a two-income lifestyle forever if they allow it.
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A Matter of Timing
Sit down and look ahead on a calender for few months. Write in that calender exactly what days you are paid. Then look at your bills and see when they are due. You can call the credit card company and have your date changed. This should help you a little. I know that with some expenses the dates are fixed but look into it anyway. It can be done.
Our Budget Proceedure
We are a family of four living on a single income, paid monthly. Here's a sketch of our budget procedure. On payday, I write all the checks for our fixed expenses and utilities (I've arranged with all the companies to have my bills arrive before payday and be due afterwards) and enter the amounts for automatic withdrawals like mortgage payment and student loan. I also transfer money into the savings account, for long-term savings, unscheduled expenses like clothing and car repairs, and emergency funds. Then I take the remaining amount and divide it by five to give me an approximate weekly allowance for groceries, gas and incidentals. I then withdraw that amount in cash for the first week and use only cash for purchases. At the beginning of the next week, I give myself a new allowance. When you're used to living within this framework, you can use a debit card or write checks for your allowance instead of using cash, but cash is a good visual reminder of how much you started with and how much you have left.
Mary T. in Richmond, IN
A Question to Ask
When you are shopping, always ask yourself, "Do I need this?" I have found that I don't need most things I would have bought without a thought a few months ago.
Lisa B. in Missouri
1, 2, 3
With getting paid once a month, Lucinda needs to make sure that all of her major expenses are less than her net pay. Once she determines that, she needs to look at what should be left over after all of her monthly expenses are paid. She needs to set her priorities at that point, putting money away to do things she sets out as a goal.
If she should have a certain amount of dollars left after paying the bills, but ends up broke at the end of the month (which is her problem at this point), then she needs to find out where the money is going. Keeping a small notepad with her to record all purchases would really help her to determine where her money is going.
Once Lucinda figures out where her money is going for the most part, then she needs to make hard decisions about what stays and what goes, so to speak. An envelope system really helps to curb spending. Set up so much for each predetermined category. Once the money is spent, it is gone.
Reduce School Loan Payments
Have you tried consolidating your school loans? When I first got out of college, I had five different loans (one for each year). The minimum payment was $50 per month for each of my five loans equaling $250 per month. After I consolidated, and it was a long and difficult process (no one wanted me to pay less even though it was my right), I only had to pay $50 per month!
Find out if you can benefit from student loan debt help.
Ready and Waiting
When I taught school, I was paid once a month. I divided my paycheck into four equal portions, got three money orders or cashier's checks for three portions, and spent the one portion that was still cash. I put the three money orders or cashier's checks away. Each Friday, I would go to the "money box" and would pull out one money order, cash it, get groceries, and pay bills. The money always seemed to last longer. Of course, there were emergencies where I had to cash a money order early, but it worked for the four years I taught school.
Teri S. in Carson City, NV
Take the Next Step
- If you must move back in with your parents, here are 5 ways to make the experience a positive one for both you and your parents.
- Consider if an attempt to keep up with friends' spending habits is causing part of your budget pain.
- Find out if you can benefit from student loan debt help.
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!