Struggling to pay rent and other bills? These few steps will help.
Often times, the root cause of being in a tight spot financially is due to
a lack of planning and tracking.
Assess the situation-
First things first, examine your current financial situation. You will need to look at your current monthly expenses vs your income. For expenses, you will want to look at both re-occuring(rent, groceries, debt payments, etc), as well as varying costs (gifts, travel, etc). A good way to get an average on all of these costs is by looking at the last few monthly bank statements. When you have this info, compare it to your net monthly income (after taxes). This will give you a pretty good idea about your current ratio of income to expenses and what apartments to rent.
Cut out any fat-
Everytime I go through and Assess my finiances, I am surprised at how much money I spend on unnecessary expenses such as dining out, apparel, and online shopping. You will most likely experience the same. When looking at these unnecessary expenses, choose 1-2 that you will make a commitment to yourself (or your significant other) to eliminate from your monthly spending so that you can pay your rent with ease. We will go over budgeting for your wants in the next section. Choose 1-2 that you can eliminate that are completely unnecessary. At one point I was spending $6-8 every weekday for a smoothie. This one expense was costing me as much as $160 per month, and I ended up eliminating it all together.
Budget for your wants-
You hear it all the time and it is hard to cut out this that you like. Although after following the first two steps, this is the next step to truly get you on the path to a healthy financial status and have money to pay for an apartment that you acutally what to live in. You have already eliminated 1-2 unnecessary expenses and the next step is to budget for your necessary expenses as well as your wants. It is not healthy to eliminate all wants from your life, but it is important to be smart about the money you put towards them. Let's say all of your "wants" expenses totalled between $400-$600 per month, depending on the month. Budget a set weekly "allowance" for your wants, to turn your unpredictable monthly expense into a fixed amount. Say you want to cut your "wants" expenses in half, from $400 per month, down to $200 per month. You could set a weekly allowance of $50 to use throughout the week for these purchases. Pull out this amount in cash, you will be more careful with the spending if its cash you're using instead of a card to swipe.
Track and monitor your progress
With these few steps, you should be able to cut your monthly expenses by 10%-20%. Think of what you can use this money for. You can build a stronger savings nest, put more money towards any debt payments, or up your retirement savings contributions. Track your progress monthly to see if you are improving, and don't worry if the first month is not a complete success, small steps and learning as you go will be key.
This guest post was provided by our friends at Guide Property Management, a Seattle Property Management Company.