This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
First, you need to determine why you are stuck financially? This will require you evaluate the root cause of the situation.

PART TWO  Plan!
I know what you have is limited, and in some cases, very limited. It is imperative, however, that you plan what you do have with a budget!

PART THREE  Prioritize
When you have an extremely limited amount of funds, it is important to remember the priorities. (Credit cards vs. house payments)

PART FOUR  Execute
Take action! Whenever I am overwhelmed, I’m more likely to freeze up and do nothing. I just want to shut down and ignore everything. However, running away from problems will just make the situation worse. You must follow your financial plan you put together.

I’m sure some will read this “take action” statement as “go work like crazy and earn more money”. I would certainly not disagree with working more and earning more as it is a GREAT way to fill in the gap. There are, however, many more ways to fill in the gap. Here are a few.

Pray. I am a Christ-follower, and I have seen the power of prayer.
If married, ensure that your spouse is on board. There is POWER when you work TOGETHER on your finances!
Sell Something. Maybe your house payment is eating you alive. Sell the house. Sell the motorcycle. Sell the boat. Sell the truck. Sell the swing set. Sell the four-wheeler. Sell the LCD 50″ TV.
Reduce OUTGO. Many times you can substantially lower your credit card payments just by calling them! I lowered my cable/internet bill by 75% just by calling! Use cash for the categories you tend to spend impulsively (groceries, restaurants, shopping, entertainment, spending money). Call and get a new quote on your homeowner’s/auto insurance.
Chop up the credit cards. If they are a crutch that keeps trapping you, it is time to chop them up.
Make it a family effort! There is NOTHING like a unified family. Nothing.
Ask yourself these questions:

• “Is there something that can be sold?” If there are items that can be sold, this needs to be fully investigated to understand how it can help the situation.
• “What expenses can be stopped?” Are there any “extras” in the OUTGO? Common examples of this expense are subscriptions like cable television, gym memberships, etc.
• “How can INCOME be increased?” An extra job or tons of overtime may not be appealing, but living in a pile of debt with no hope is even worse! It is very important to investigate short-term ways to increase income to get out of the current late bill payment situation.

It will be extremely difficult to work through your challenging financial situation. It will most likely not be fixed overnight. This process will take time and it requires you to ENDURE. Remain focused because the end result is worth it!

Below are some practical tips that have worked for me when I have faced overwhelming situations.

• Establish accountability.
• Ask for help.
• Seek wisdom. 

These three tips can be summed up with “get a financial coach!” A financial coach will hold you accountable to key decisions you need to make. They will also provide helpful encouragement that will help you endure to the finish.

Remember…YOU CAN DO THIS!

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
Why are you stuck? It’s important to understand why and evaluate the root cause of the situation.

PART TWO  Plan!
Planned money accomplishes far more than unplanned money. There is so much power in a written spending plan – a budget!

PART THREE  Prioritize
When you have an extremely limited amount of funds, it is important to remember the priorities. I have met a lot of people who have been tricked, guilted and shamed by credit card companies into paying the credit card bill instead of their house payment.

Here is my suggested order of priority for spending when there just is not enough to pay everything.

1. Housing – Must take care of the mortgage and utilities first. Now if the mortgage payment has run out of control and it is 60% of one’s take home pay, then it is high time that the house be sold or income be tripled within a couple of months.
2. Food/Prescription Medicine – I am going to eat before one single bill is paid! We must be able to eat. I am not talking about Olive Garden or fast food. I am talking about groceries bought with coupons and attention to frugality.
3. Transportation – If transportation is required to produce income, then it is imperative that the vehicle payments, insurance, taxes, gasoline and maintenance be funded.
4. Back Taxes – Owing the government back taxes is a terrible thing, and it must be addressed. I would rather owe anyone besides owing Uncle Sam!
5. Secured Debts – If there is additional money remaining after housing, food, and transportation are taken care of, it is time to pay the secured debt payments. This is debt where the lender can come take something – like a car, boat, motorcycle, tractor, etc. If the lender repossesses the item, they will sell it at a wholesale auction and come after you for the difference.
6. Family & Friends Debts - If you owe family and friends and you still have some money left, it is essential to pay on debts owed to family and friends. Unpaid debts to family and friends have been the cause of untold relationship issues since time began. Avoid this!
7. Unsecured Debts – It is time to address the unsecured debts – credit cards, student loans, signature loans, etc. One thing to note is that unsecured debt holders will be screaming and hollering the loudest because there is nothing they can come take from you. As a result, they will try to play upon your emotions to get you to pay them before you pay anyone else. And it works! I have met with a lot of people who have kept their credit cards current while letting the house payment fall behind. Not good!

Who is the manager of YOUR money? It should be YOU! Not your creditors! YOU choose where it goes.

Go back to your spending plan you have prepared and ensure your priorities are in order.

Even if you don’t have enough money to pay all of the bills, go ahead and put all of the bills into your spending plan. This is a KEY step! You need to clearly understand how large the gap is between you INCOME and your OUTGO. We will address this in Part Four.

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
It’s extremely important to understand why you are stuck.

PART TWO  Plan!
Now that you have identified the reasons you are stuck, it is time to prepare a written spending plan. That’s right, a budget.

Here is something I have learned – planned money accomplishes far more than unplanned money. There is so much power in a written spending plan! I never realized where all of my money was going until the day I began planning my spending.

A spending plan will ensure you know the actual situation instead of the imagined situation.

I know what you have is limited, and in some cases, very limited. It is imperative, however, that you plan what you do have.

There are free tools available on the I Was Broke. Now I’m Not. website (just click on TOOLS). 

Monthly Budget Form (Excel) If you are paid once per month, this is the budget tool for you.

Weekly Budget Form (Excel) If you are paid multiple times per month (twice/month, bi-weekly, bi-monthly, weekly, etc), this is the budget tool for you.

My newly revised book, I Was Broke. Now I’m Not., has four chapters devoted specifically to teaching you how to use a budget to thrive financially.

Have you ever been stuck financially? I mean STUCK. Do you feel so stuck that you can’t gain traction to get control of your finances?

Perhaps you have no income because you have lost your job. Maybe you’re in college and accumulating debt to pay for it. Perhaps your spouse spends money faster than you can make it. Or maybe you’re just lost when it comes to managing money. It might even be the fact that you have so much unsecured debt that you feel completely helpless. Maybe you’re disabled, and can’t figure out what to do to earn more money.

This series is written for those who are struggling with their finances. You might even be making tough decisions about what will and will not be paid this month. It is my hope to provide practical steps you can take to walk out of this situation and into a fully funded life.

Let’s get started on the journey and get unstuck!

PART ONE  Evaluate
It is extremely important to understand why you are stuck. You must ask yourself challenging questions. There are some situations that have definite ends to them (college) and other situations that may continue on indefinitely (job loss, disability, and overwhelming debt).

When I’m coaching a person who says, “Help! I can not pay my bills!” my immediate response is to evaluate the root cause of their situation. I ask questions to grasp the real issues. Here are some of the questions I ask to help move you along in your financial journey. These are not in any particular order.

“What was the cause of this situation?” Is your financial situation the result of a long series of poor financial decisions or the result of a catastrophic event like a job loss, medical issue without insurance, death of income provider, etc.? Can you point to a particular poor financial decision that has led to your financial challenges?
“Is this an INCOME or an OUTGO issue?” Prepare a budget to help you more clearly determine the answer to this question. Identify where your money is going using your credit card and bank statements. As you identify you monthly income and total expenses from the previous month, it is important to challenge each expense with the question, “Was this expense absolutely necessary?” While most people in financial challenges believe their issue is an income problem, I’ve learned from experience that in most cases, it is an OUTGO issue.
“What are the required debt payments?” As you identify all of your debt payments, determine if each one is unsecured revolving debt (credit cards) or installment debt on an asset (car, boat, motorcycle, etc)?

As you identify why you are stuck, write the reasons down on paper.

Do you have other questions that you would add to this list?