For many people, balancing a budget can be quite difficult. It’s not because they aren’t good at Math. It’s just that life can be unpredictable. Things happen that can throw a curve ball to your budget that managing it feels like a balancing act.
If you have kids, their needs increase as they get older. Tuition fees become more expensive.
Someone in the family might get sick. Hospitalization, doctor’s fees, and medicines can be quite expensive.
Your car breaks down. Car repairs and maintenance are not standard items in your monthly budget.
Then there are the economics of day-to-day life:
- Petrol prices go up
- Cost of commodities go up
- Traffic gets worse, you’re stuck in the main freeway longer than usual
Unless your boss gives you a nice, fat pay raise or your business is in a boom cycle, chances are your expenses are higher than your income.
For many people who can no longer balance their budget, debt becomes the only solution.
So they apply for ready credit facilities from their bank or secure a quick cash loan from a lender.
They will use the money to pay off shortfalls in the monthly budget. Why go into debt to make ends meet?
In their minds, this is just a temporary situation. Everything will be back to normal after a few months.
“Perhaps I can get that pay raise that is long overdue.”
“Hopefully, sales will pick up in a few months.”
They borrow money based on a hunch or speculation that “things will get better”
There is a term lenders and banks like to use:
Borrow money or get into debt in order to bridge your monthly shortfalls.
Unfortunately, nothing is ever written in stone.
That pay raise might never happen.
That sales boom might end up a bust.
That bridge can collapse and cost you more money than what you actually owe.
So don’t use debt to make ends meet. The risk you take is much greater than the expected rewards. Rather than get into debt, you can do the following:
- Cut out unnecessary expenses. You’ll be surprised at how much money you can save by not eating out and spending for a cup of coffee at your favourite coffee shop.
- Manage your utility bills. Close all lights in rooms that are occupied. Ration your usage of water. Sleep earlier.
- Find a second job, a side line, or take freelance projects for extra income.
- Come up with a garage sale and make money from stuff you don’t need.
- Be prepared to sacrifice. This might mean sacrificing the annual vacation or cancelling subscriptions to cable TV and Netflix.
- Be ready for a lifestyle change. Are you still single? Well, you may have to stay single longer. Cut out date nights and social gatherings. Are you married? You and the spouse may have to spend more time indoors. Family? Tell the kids that family activities will be cut down a bit.
Debt is a short cut that offers no long-term solution. Avoid debt at all costs and just focus on making your current situation better even if it means implementing temporary cutbacks.