Beginner's Guide to Fixing Your Finances When You're Dead Broke

Updated on July 25, 2017

Step One - Admit You Have a Problem

Just like anything other problem that you face, you can't start to address your money issues until you realize that you've got a problem on your hands. If you aren't sure, check this list of warning signs.

- Your bank account regularly has a $0 balance.

- You can't pay your bills on time.

- You stress about money every second of the day.

I'm kind of kidding, you don't have to be in THAT dire of a situation. Sometimes you might actually know that you are having some problems, but you may not realize just how big they are until something major happens.

I didn't have my "uh oh" moment until I found out that I was pregnant. I thought I had the flu. I went to the doctor. The doctor said it wasn't the flu, it was a baby. Right away I was nervous, but when I went to my first prenatal appointment and had to shell out a few hundred dollars for tests and sonograms (that's after insurance), I realized that I was in some deep trouble. I only got more concerned when my credit score tanked due to a car loan that I had taken out before I knew that I was about to face a mountain of medical bills. My fiance and I both work, but neither one of us makes any major money at the moment, so this new financial burden was pretty terrifying.

Source

Step Two - Do Something

Okay, so now I knew I had a mountain of medical bills, and astronomical car payment, rent, tuition, and about a million other things to pay for. I knew that my credit score was suffering and I knew that I was in some deep trouble if I didn't do something quick. Unfortunately for me, I let the panic and the anxiety take over for a solid two months before I ever actually came up with a plan of action. Don't make that mistake. Instead, choose a place to start and get to work.


Track Your Spending

The first thing that you can do to improve your financial situation is to track your spending. Pay attention to where your money is going. How much is your rent? How much is your car payment? What do you pay for electricity? Are you spending an arm and a leg on fast food or iTunes purchases? You can track your spending in an Excel spreadsheet, which is what I did at first, or you can use one of the many apps that were developed for exactly this purpose. Either way, a comprehensive spending report will show you where you are wasting money.

The first month that I did this was an eye-opening experience. My fiance and I already lived together, so I took it upon myself to start tracking both of our finances. While most of my money was spent on bills, I realized that I was also spending an entirely unreasonable amount on food each month. I also realized that my fiance is horrible with money. In one month, he spent almost $300 on iTunes. Yes, that is three hundred dollars. On iTunes. Neither of us had ever realized just how much of his income was being flushed away on in-game purchases and ringtones. I was livid, but at least we knew one area that could be significantly improved.

Set Your Goals

Tracking your spending is great, but your situation won't change until you actively do something to change it. Once you know where your money is going, set some specific financial goals and priorities for yourself or your family.

I had a ton of concerns about my budget and even more about my fiance's. Aside from the budgeting disaster that was iTunes, I realized that I was paying almost $300 per month for four credit cards. Two of them had a relatively low balance (less than $1000), but two of them had embarrassingly high balances. I honestly don't even know how 24-year-old obtains that large of a credit line, but I did and I used way more of it than I should have. Thus, my first major financial goal came to be born.

I decided that my very first goal was to pay off my lowest balance credit card by the end of the following month. That meant that I had one month to come up with enough money for all of my bills and doctor visits as well as an extra $500 to get this pesky credit card and all of the interest that came with it out of my life forever. I wasn't actually sure that I could do it, but determination is a great trait for those of us who have dug ourselves into financial pits.

For the record, my fiance's first goal was to stop spending money on iTunes. He succeeded. It probably saved our relationship (halfway joking).

Live By Your Budget

We all know that we need a budget. Most of us have one (if you don't, make one immediately). Most of us also don't bother to use the budget we have. We are really doing ourselves a disservice.

As soon as you know where your money is going and what goals you have for your money, look at your budget - or make a budget.

Use an app, use a pen and paper, use Excel, use the envelope method, do whatever you have to do to make a realistic budget. Take into account all of your bills and all of your expenses. Don't forget about things like eating out or going to the movies - those activities still take money out of your pocket. Set your budget according to your goals. If you want to pay off debt, make sure that you have some money for that purpose (even if it's only an extra $10).

Once you have your budget, do not deviate from it. Don't use the $10 that you budgeted for debt reduction to go out and have dinner with a friend, no matter how much they beg you. Don't use it on gas or cigarettes or chocolate either. Put that money exactly where you said it would go.

This is the absolute hardest part of making a big financial change. There's always that one friend that wants to go out to eat or that one parent that begs you to drive six and a half hours to visit them this weekend, and I have a really hard time saying no. I spend at least one day every week feeling like a grandma, but a few days of grandmother-hood are nothing compared to the pride that I feel when I finally meet one of my financial goals. The day I paid off that first credit card (less than 24 hours before my goal) was one of the proudest days of my life.

Evolve your Goals

Tracking your spending, setting your goals, and living by your budget are three of the best things that a beginner can do to improve their financial situation, but none of the changes you are making today will last forever.

As your financial situation changes, let your financial goals change too.

Revisit your budget often. Look for ways that you can reduce costs and spend more on what matters to you. Find ways to make more money that you can throw into the pot. Come up with creative ways to slash your spending entirely for a week or two. Have fun with it, make budgeting and saving a game.

Revisit your goals too. As you meet one, come up with another. Don't be afraid to make your goals bigger and more challenging. Also, don't be afraid to stumble a little. Keep reaching for the next step; there will always be a next step.

Whatever you do, don't get discouraged and don't give up. No matter what your bank account looks like today, there are millions of us out here who feel your pain. Getting your finances on track when you feel like you've dug yourself a hole to the middle of the Earth is very hard and very scary, but it's also very doable.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://toughnickel.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)