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Dealing with Debt
I'm Already Behind!
Q: How do you start a budget when you are behind with past-due bills?
A: Wow! I'll try to cover a few points here, but know that there is a lot that can't be answered simply.
In short, you'll never be able to catch up with the "past dues" unless you implement a budget. The cycle will not be broken until you see exactly where the money is going, and when. Only then will you have hope of gaining back control. In my book, I use the analogy of driving a car blindfolded. For an important task such as driving, where lives are at stake, we go to great lengths to give as much information to the driver as possible: mirrors, glass all around, instruments that measure speed and fluid levels. Now think about what would happen if you took just one of those feedback mechanisms away. Suppose you didn't have a gas gauge--you could be stranded, forced to spend time and money to get going again. Or, to prevent that, you'd stop for gas more frequently than needed, wasting time to ensure an adequate supply. Running your finances without a budget is like driving a car blindfolded.
In the process of setting up a good budget, you'll see the areas of your spending that need adjustment or redirection. Once you know how the money is coming and going, you'll have to allocate a new "expense" to catch up on past bills. It is the same as if someone were trying to pay off credit card debt. Paying off the debt becomes an itemized expense in the budget itself.
A common misconception is that a "budget" is just a list of your expenditures, or a "tracking" of your spending. These types of budgets don't work. You need one that combines "up front" planning with controls and mechanisms much like the car analogy. You need features that give you the information you need to make the most intelligent decisions and ways to ensure your budget is regulating the expenses you are watching. You need to be at the controls, and a good budget will put you there!
Remember, a budget is a tool (like your lawnmower is a tool, or your computer is a tool) to help you function better!
Jane Chidester Jane@TulipTreePress.com is the author of "BudgetYes! 21st Century Solutions for Taking Control of Your Money Now!"
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