When Your Budget Is In Crisis, What Do You Do?

In Wednesday’s Budgeting Basics post, guest poster Rifka talked about the “Kulam b’Minus” mentality. In response, a reader named Tzipi asked:

Everything you said makes perfect sense, but the question is, how do you get out of the minus? We have all our numbers written out, we know what we owe, and to whom we owe it to, but we just can’t dig ourselves out of it. We’ve cut EVERYWHERE we can possibly cut, but the problem is, after we pay all of our bills each month, before we’ve purchased the first morsel of food or anything else we might need, the money is gone and we have to revert back to the credit cards to put food on the table. Using coupons and shopping wisely has cut our grocery bill way down, and we live very frugally, but we just don’t know how to dig out to get out of the minus. I’d love to cut up the credit cards and never touch them again, but that would literally mean we wouldn’t have food on our table. Any advice?

I started to respond to Tzipi’s question in the comments section, but I quickly realized that it really deserved its own post. I know she must be scared to death. I can certainly understand the horror, shame and uncertainty that she faces.

If you are Tzipi – or you know exactly how she feels – let me first suggest that you just stop for a minute and take a breath. You are a good person, no matter what kind of financial mess you are in right now. And you will turn this around.

The most important thing is to cling to your husband, your children (if you have them) and yourself. Everything else is extraneous.

As for tachlis, what to do, I suggest that you triage. I realize there are many specifics of your situation that I am not privy to, but the following is what I would do if I found myself in the crisis you described.

(Some of this advice may be hard to hear, but your comment read like an SOS to me, so I think you are probably open to hearing it.)

First | Increase your income.

You are starving, dear one. If you can’t feed your kids without credit cards, you are starving. So, priority #1 is to get your income up.

I’m sure there are 100 reasons why this won’t work, or that won’t work, but the bottom line is food is not negotiable. You and/or your husband are going to have to take on some part-time jobs. Work opposite shifts if you need to to avoid child-care costs.

It will be extremely hard and you will be exhausted. But this is only going to be temporary. Right now, though, you desperately need more income.

At the same time, start looking at your five-year plan. What can you do, career-wise, to change your income-earning trajectory. Do you need to change jobs, get some more training, advocate for a raise? Five years from now, you need to be earning twice what you are today – so now is the time to set a plan in motion to make enough money to more than just survive.

As I’ve said before, when we decided to get out of debt, I took on a pile of freelance work. I hustled my tush off and got five new clients the first month. I worked three times as many hours for only twice as much pay, but I earned an extra $1000 a month – which was enough to bring us past the point of breaking even.

A friend recently told me that they are getting out of debt. Since she has a baby at home, and another one on the way, she has decided to start babysitting. She is watching one more little one during the day, and taking care of two after-school kids in the afternoon. Together, she’s bringing in an extra $1200 a month.

Second | Sell Stuff

At the same time that you are increasing your income, you can bring in a short term infusion of cash by selling stuff. Take a HARD look around your home and figure out what you can sell. If it’s not bolted down or breathing, it’s fair game.

Strip your life down to the bare essentials. You won’t have to live like this forever – I promise.

Third | Set new priorities, because someone isn’t going to get paid.

I believe you that you are living as modestly as you can. But take one more look. Are there any sacred cows in your budget? Challenge every assumption.

If the answer still is that there is *nothing* you can cut from your budget, then it’s time to face a hard truth: You can not afford to pay all your creditors right now.

Something is going to go into default. You simply can not continue to pay your debts if it means you aren’t feeding your family.

It’s time to repriortize the budget. The #1 item – the thing that gets funded before all else – is feeding your family. Not AFTER the creditors are paid. BEFORE.

I’m not taking brisket and salmon. I mean basic sustenance. Enough food so that no one is hungry.

#2 is your utilities. If you don’t pay those, they get shut off. Who cares if you’re current on your credit cards if you don’t have lights. Now, utilities does NOT include cable. It may not even mean phone. But basic heat, lights, and water must be budgeted. Conserve and reduce as much as you can, but pay your utilities second.

#3 is rent or mortgage. If this category consumes more than 25% of your take-home pay, it may be time to seriously consider a change of location. Drastic times do call for drastic measures. But either way, you need a roof over your head – and for the time-being that means paying the rent/mortgage that you signed up for.

#4 is transportation. You need a way to get to and from work. Whether that’s bus fare or gas money. You don’t need to be driving all over town running “errands”, but you do need basic transportation.

After those four things are funded (Dave Ramsey calls them the four walls), you can start filling in everything else. I’m not telling you to throw your bills in the garbage and pretend they don’t matter. When you stop paying them, you will eventually get sued.

Being sued will be unpleasant. Extremely unpleasant, even. But not feeding your family is worse.

I am so sorry for all the heart-ache you are no doubt in right now. Please believe me that this, too, shall pass. But for right now, you need to cling to the life-raft that is your family. Together, you need to focus – with laser-like intensity – on those things that are truly essential.

Reprioritize your budget so you are taking care of basic necessities. Sell as much stuff as you can. And do everything in your power to ratchet up your income – both immediately (part-time jobs) and long-term (a clearer career plan).

Thoughts? Questions? Disagreements? Let’s talk crisis budgeting in the comments section! (Please remember to be kind and constructive in your comments.)

Comments

comments

Comments

  1. This sounds like a time to turn to community resources. Firstly, apply at a food pantry, Jewish or other. Second, check with your Jewish Federation or Jewish Family/Childrens Service, to see what kind of financial help they can provide. Look for different types assistance such as large grants, free loans or help with utility bills. (JFCS should also be able to point you to other programs you may qualify for.) There may also be a Tomchei Shabbos that can help. Be sure to look into the WIC income guidelines to see if you qualify.

    Mara – where does tuition fall in the hierarchy of finanacial obligations?

    • All these suggestions are great. Also check with SNAP (food stamps) and Medicaid.

    • Great advice Rivka. I would just add that my only concern with grants/loans is that it may perpetuate the situation she is in – you can’t borrow your way out of debt. But absolutely, WIC, food pantry and other social service support is a must. I don’t know, tho, if they have enough income to live modestly, just not pay all their debt – or if there was some income crisis, which is short-term. Reliance on community support may also depend on the answer to that question, IMO.

      As for tuition – that is a very hard question. I certainly don’t have THE only right answer, and again, I can only answer with what I/we would do. I guess, first, we’d go to the school and ask for an emergency (full) scholarship to finish out the school year. Even with scholarship, though, families need to pay *something* and right now, they may not be able to afford even that minimum payment (I don’t know the specifics, so I’m just speaking in generalities). If we were in this crisis situation, and by the summer our financials had not drastically improved, I am pretty sure we wouldn’t send our kids to dayschool the following year.

  2. I hear what you are saying but jobs just don’t come out of thin air – child care is extremely
    Expensive and if you have a child with s

  3. Sorry didn’t Get to finish my thought – my points 1# a family with a child with special needs makes finding ” a 2nd job or another shift” unbearable #2 a lot of medical insurance has deductibles of insane amounts that you can’t get around (5,000$) 3# I believe if someone is not having food on the table I agree that they are places to help and there thankfully are a lot of programs to help with utilities but even with all of that most people still are having a hard time making ends meet . There is no simple answer – going back to school even with Financal aid it doesn’t cover books or supplies – tuition for children also is difficult – I hope the job market picks up soon as well as the economy.

  4. We are in this same situation and have exhausted so many possibilities! How do you find energy to do extra jobs when you work full-time and have a family to take care of? How do you convince the school that if you pay your tuition your family doesn’t eat? And how do you sell stuff and actually make money?

  5. When I started reading this I thought to myself, this sure sounds like Dave Ramsey advice, then I couldn’t believe you mentioned his name!
    Do the “Financial Peace” way of life!! There is “Financial Peace University” classes for a certain amount of weeks you can do, and the “Money Makeover” book & workbook. He has a free daily podcast that I download from iTunes also. Now, I do filter out some of the religious stuff, his political “side” & that his show on ‘FOX’ but he really has one goal, to help everyone get out of debt! No get rich gimmicks, no stuff to buy into, just the right thing to do for your financial future!!

  6. Mara is right — some of this is incredibly hard to hear. But I have been there. Our special needs child threw our lives into disarray. We went from having around $70k in the bank to having $30k in debt in a matter of about 8 months because of private therapies — but also because of things like picking up pizza instead of cooking, having a cleaner, buying new clothes as our rapidly growing son (he has an overgrowth syndrome) outgrew what he owned. When we figured out our debts, it was horrifying. We cut the cleaner, cut the meals, cut the new clothes, and started learning a new way of life. If you’re reading Mara’s blog, you likely have Internet access and a home phone line. Do you *need* a home line and a cell phone? Do you *need* Internet access? I know it’s impossible to imagine living without some of these things, but I promise you that it is possible. And I know that it seems incredibly drastic and perhaps blasphemous, but paying for private day school tuition when you cannot afford it is NOT teaching your children the right values. Jewish day school does NOT make you or your child a good Jew. If you walk into the school office truly ready to withdraw your children and enroll them in public school, one of two things will happen:

    1. The school will stand by and allow you to disenroll your children, whereby you will decrease your monthly expenses dramatically

    2. The school will recognize that you are serious and will dramatically reduce your tuition/increase your financial aid

    Either way, you will be better off. I HAVE BEEN THERE. I have walked into the financial manager’s office and laid it all bare. IT IS HUMILIATING. But it is also the responsible thing to do. It is NOT responsible to continue living in debt.

    You can find hundreds of reasons that you “cannot” take on extra work, move to a smaller place, cut certain expenses, or whatever. But the moment that you remove “can’t” from your vocabulary is the moment that your life will change.

    If you had told me that I could function for over a year with no cleaning help AT ALL, with not a single restaurant meal, with 5 children at home, including one with special needs, and with working full time in addition to following a rigorous therapy schedule, I would have laughed in your face and given you a million reasons why that was not possible. But here we are, a few years later. We made it through “the dark days.” Mara can tell you that we live a rich and full life. We have enough money for all the things we need and enough leftover for many of the things we want.

    When it was necessary, I listed an item on Craigslist every day. Even $5/day is an extra $150 at the end of the month. If you are truly starving, that is real money.

    I know plenty of special needs families that work extra shifts or extra jobs. It’s not easy. It’s not fun. But it’s sometimes necessary, as hard as that is to hear.

  7. I can tell you that the exhaustion of working that extra part-time job is almost too much, but it made me give my kids some of the housework, and the rest of it just gets ignored. My 6yo has earned how to vacuum and wipe down bathroom sinks. My 9yo gets to clean the toilets, fold laundry, and empty the trash around the house. (Other cleaning tasks just get done once a month when we find the time.)

    Both kids make their own lunches. They often make their own dinners – sandwiches, tortilla roll-ups with anything inside… while I work from home, or take a short nap in order to have enough energy to make it through the next 5-6 hours of work. It’s really hard, but it’s not forever. And it’s good for my kids to have chores and learn how to make healthy meals.

    Shabbat is another area we’ve had to adjust. I do not have 3-4 hours on Thursday nights to cook the way I used to. Our meals are much simpler now – sometimes just a big pot of chicken soup with lots of chicken and matza balls, other times, it might be tacos or lasagna. I know these are non-traditional, but it’s what I need to do in order to survive the week.

    I also often skip shul on shabbat (but send my family) so I can take an extra nap, or read – it helps me recharge my batteries to make it through the following week. It’s not for everyone, I know. But these are the priorities I need to have so I can survive these stressful times.

  8. Tzipi, my heart goes out to you. It’s not forever, although I know it may feel like it. One thing that hasn’t been mentioned yet in the comments is possibly bartering. Maybe you can watch someone’s child/ren so they have time to clean/work/relax and then your friends can do the same for you. My friends and I do this and find it to be a huge help. Essentially “trading kids” for an afternoon or morning gives you time to budget, clean, cook or simply take care of yourself. One of the best parts of this for me was the chatting with friends during drop-off or pick-up. It opened up a dialogue about time and money, which then led to budgeting talk. It’s easy to feel as if you are the only one having money problems, but I promise you that’s not true. Bartering won’t solve all of your problems by any means, but it might help.

    Oh how I love the library! We never buy books, DVDs or CDs we check everything out of the library and take advantage of their movie nights and craft events. If you’re checking out books and DVDs it makes it very easy to cut cable out entirely or even sell your TV if you watch DVDs on your computer. It is easier than you think to live without a TV.

    Tzipi, this may be the hardest one, but asking for help will open up doors and conversations. It’s not comfortable or easy to say you need help. No one wants to be that girl. Asking for tuition breaks or food is not easy but know this that doesn’t say anything about the kind of PERSON you are, it speaks to the SITUATION you are in.

  9. I really applaud all of you who have climbed your way out of debt. I think you’re setting a really great example for your children and others around you by taking responsibility for your “spending” actions. It sounds so hard and it’s amazing you were able to do it!

  10. Most of my thoughts have already been mentioned, but here are a couple additional suggestions:

    1. Home-based businesses are great and can help you get out of debt — on your own hours and schedule. Most direct sales business have very low start-up costs and provide basically unlimited training and support. I recommend using the Direct Sales Association website (or your circle of friends) to find the one that would be the best fit for you. In addition to helping me earn additional much-needed $$$, my home-based business gave me a load of self-confidence that I desperately needed when I started this venture. Don’t discount how much that can help you move forward toward debt reduction. If you have questions about direct sales and how it can be fit into an already busy life, you may feel free to contact me at caroline at alumni dot uiowa dot edu. This is not a sales pitch–I promise. It’s a genuine offer to help.

    2. It goes without saying that while your food should be nutritious, it does not need to be lavish. It’s wonderful to honor Shabbat through a beautiful meal with many fancy dishes, but honoring your family’s needs and limitations through a simple meal is just as wonderful. Sometimes, one wants a larger meal surrounded by more friends. This is when we frequently potluck to spread the cost (and work!) around.

    Best of luck to you, Tzipi — and to all of the silent Tzipis out there. I have been there. I am still there. We will all make it through.

  11. Thankfully I am not in debt as of yet – we don’t do family vacations nor do I have a cleaning lady – yes I have Internet because I home school a child so it’s not an extra – we never go out to eat pick up a pizza – we have food on the table – I grew up in a house where both my parents worked to make end meet I at 7 let myself in after school do my own laundry and took care of my own dinners – while putting chores for your child is important they are not mini adults – schools will give you a break but harass you to no end about what you owe –
    Love the library – its great and free – we pay 200$ for our library so use it use it use it !!
    Fun family things to do if you aren’t working 4 shifts ;) sledding -( when we have the snow )
    Chagrin falls – stunning and u can see the fish, ducks and frogs !!
    As far as the Internet also there are so many coupons that are simply amazing
    Costco – split the membership with a friend because you can get 2 cards with one membership .. Brick of cheese only 13$ and unless you have American express you have to use cash or debit ..
    Just a few idea to add –
    I know what it’s like to be in that situation and it feels endless – I say the best thing in the world is endless support from the people you love . Sometimes a listening ear is all you need to get you through the bad times .

  12. I would like to emphasize again:
    Please, please call your local Jewish Family Service! As a member of our local agency’s executive committee, I will tell you that JFS is there to help a Jewish family in crisis – no exceptions. Not having enough money to feed your family is an emergency.
    I would also urge you to talk with your rabbi, or rebbitzen. You might be surprised what the can do , and the connections they have.

  13. I want to thank everyone for your advice, and more importantly for the feeling that we are not alone. We have a long road ahead of us, but I know we will pull through. It took a lot of courage for me to put up my initial posting, but some of what gave me the strength was that I know that our family cannot be alone in our situation, and I hope that others can also benefit from the great advice that you all gave to me for my family. With Hashem’s help, and with hard work, we will all make it through these tough times and come out stronger in all aspects of our lives.

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