What To Do If Your Income is Reduced
It's challenging enough to make a paycheck last when it comes on a regular basis – but what happens when you have to take mandatory vacation, or are paid for some months out of the year but not others? With planning and a careful look at your finances, you can survive the times when the checks are on hold but the expenses march on.
What to do today
Your first task is to take a look at your monthly expenses and prioritize them. Decide what you need to pay for and what you can, at least for now, let go. Housing, food, transportation, and insurance should take top priority. Dining out, clothes, and entertainment may need to be sacrificed for the time being. Remember, this isn't forever, when the cash is flowing again, they can be resumed.
When shopping, consider every purchase. Ask yourself if you really need it, and if you do, can it wait a while, or can you get it for less somewhere else. Getting in the habit of asking yourself these questions will help you become a savvy shopper in both flush and tough times. This will also help you avoid relying on credit cards during this difficult period. It might be hard, but you will be so much happier when that next paycheck comes in and it is not promised to high interest debt.
If you have credit card payments, and you simply don't have the money, contact your creditors immediately. You may be eligible for special programs that will keep your accounts in good standing. Waiting until you are behind will not only increase your balance because of hiked up interest rates and fees, but will damage your credit as well.
If you really need to scare up some funds, consider every option:
There are other sources of funds available, but beware: they may not be in your best interest in the long run.
Planning for Next Time
The money you get today will have to be stretched to cover those times when there will be nothing (or less than normal) coming in. Resist the urge to spend it all each month. Develop a detailed budget to know what your monthly expenses are, and then prorate your income:
Example: Your monthly expenses total $2,000. You don't get paid for two months out of the year, so will have to have $4,000 ($2,000 x 2 = $4,000) set aside for those non-income earning months. For each of the ten months that you do receive a paycheck, you'll have to set aside $400 ($4,000/10 = $400) to cover the time you won't get paid.
Once you know how much you will need to sock away, have the sum deducted monthly from your checking account and automatically deposited into a savings account.
Since you know you will be needing at least some of the money in a relatively short time frame, make sure you have the portion you need in an account that is easily accessible and penalty free (such as a savings account or money market account).
Careful planning is the key to surviving a time when a paycheck is on hold. By doing so, you'll avoid that dreadful feeling when the lean times are on your doorstep – and your account is bare.
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