Nine Things to Do When the Going Gets Tough

Every once in a while, I get an email from a reader that rips my heart out. Through a long series of choices and decisions and life events, they’ve reached a financial situation that’s almost impossible for them to dig out of. It usually involves children, a mountain of bills, and a job that doesn’t pay very much. Often, these people are hoping I have some sort of magic wand to fix their problems. The truth is, I don’t.

These emails are usually prefaced with the statement that most of the articles they’ve read don’t help very much. And they’re right. Most articles assume that you have significant leverage in your life, that there are many changes you can yet make to free up money and turn your life around.

But what do you do if it seems like there’s nowhere else to turn? You’ve already cut every corner you can, but there’s still a giant pile of bills sitting in front of you. Where do you go from here?

Here are nine options to look at when the going gets truly tough.

Sell your home
Most people blanch at this idea, thinking they could never sell the home they worked so hard to get. Quite often, though, it’s that very home that’s strangling your finances by saddling you with an enormous mortgage payment. It may be a good idea for you to look at lower-end housing until you can get your financial life straightened out. For example, renting an apartment can easily shave hundreds of dollars off of your monthly bills compared to house payments.

First step: Contact a real estate agent and get a realistic estimate as to what your house might sell for. Does that pay off your mortgage and (hopefully) some other debts as well?

Get a boarder
One opportunity to bring in some extra cash is to get a boarder, a person who will rent out an unused room in your home. One good place to look is at the local college, which often has students in need of housing. This can easily earn an extra $150 a month or so (or more, depending on your area) with very little interference in your day-to-day life (in fact, good boarders can often be a help with household maintenance). Another avenue is to see if there are family members and friends who may be interested in moving in with you and sharing at least some portion of the financial burden.

First step: Look for opportunities within your social network to find a boarder, whether it be a family member or a friend.

Take on a second job
One solution for the short term might be a second job. Many people work a normal job during the day, then supplement that with a second job in the evenings or on weekends. One of my friends has a job as a computer programmer during the day and a security guard in the evening, for example. It’s a good idea to find a second job that doesn’t tax you in the same way your first job does – for example, if you work a mentally challenging primary job, don’t get a second job that also taxes your brain or you’ll not do either job well. Remember, though, that the point of the job is not to finance your spending, but to dig you out of this debt hole.

First step: Do a tentative job hunt for work during your spare time, just to see what’s available. Good places to look are grocery stores and department stores who may need overnight stockers, for starters.

Start a side business
Another effective way to start pulling in some extra money is to start a simple side business that easily matches your skills. Let’s say you truly enjoy spending time with children, and you have free evenings. Why not put out the word to your social circle that you’re willing to babysit in order to help pay some bills? Perhaps you enjoy woodworking; why not look to that as a way to make something that others might buy? Make a few samples and show those to others.

First step: Canvas around your life for a way to make a few extra dollars in your spare time with things you already enjoy doing.

Sell your car
Ask yourself this: do you need your automobile to get back and forth to work? If the answer is no, strongly consider selling your car. Not only will this get rid of payments, it’ll also eliminate your auto insurance costs and your costs for your license plates as well. No gas. No maintenance, like oil changes. No repair bills. Those changes can make a huge impact in your monthly spending. And, on the rare occasions when you do need a car, you can just rent one for a short period of time.

First step: Look into opportunities for selling your car locally, either directly (meaning you manage the sale) or through a dealer in some fashion.

Cut out the unthinkable
Many people who have trimmed away all the fat they think they can trim away haven’t even actually started. You don’t need your cable box – that’ll save you $50 a month. Your cell phone? Another $50 a month – you can get a pay-by-the-minute phone for emergency uses. Do you need your home phone line? Do you need your television at all – after all, it’s a pretty big energy guzzler? Do you need ‘net access? If your gut response is “That makes life no fun!,” ask yourself if your debt situation is making your life fun.

First step: Start ditching services, and start by looking at everything short of electricity as non-essential.

Negotiate with your creditors
Quite often, many of the bills people face are for unsecured debt, which sometimes can be negotiated. Call the creditors for any debt you may have, tell them simply that you’re in dire financial straits and may be considering bankruptcy, and offer to negotiate. See if you can get a reduced payment plan or get some of the balance discharged. If you feel like the conversation is a waste of time, wait a few days and try again. Remain polite, no matter what – you’re essentially asking them to give up their business’s profit margin, after all. Remember to ask how any changes will affect your credit – if it really won’t change much and will negatively impact your credit, don’t do it and move on to another creditor.

First step: Identify your unsecured debts (medical bills, credit cards) and find contact information for some of them.

Sell your possessions down to the bare minimum.
Got a lot of DVDs or CDs? Sell ‘em – all of ‘em. Got lots of clothes? Cut your wardrobe down to the minimum and carry the rest to the consignment shop. Got a large collection of some form of collectible? Liquidate the whole thing. It’s going to be hard, I know, but this stuff is holding value, and that value can be used to help get rid of some debts and make it possible for you to sleep at night without the fear of losing the things that really matter, like your home or your mortgage. Ask yourself what’s more important, your home and your marriage or your Doctor Who Season 2 DVD set.

First step: Clean out some of your collections, particularly the entertainment-oriented ones. Sell the box sets on eBay and take the rest to a used media store.

Look into bankruptcy
Bankruptcy is sometimes the best option if you’re simply faced with far more bills than you can currently pay. This is often the best choice if you’re making a reasonable income and live in a mortgaged home. The biggest drawback here is that it’s a nuclear bomb on your credit report – you’ll essentially be starting from scratch with building your credit, and that bad credit will adversely affect loans you can get and your insurance rates. However, it does help eliminate most of your unsecured debt (meaning debt besides your mortgage and car loans).

First step: Contact a reputable bankruptcy lawyer and get a consultation. Bring in as much documentation as you can about your current financial picture (the current statements of all debts, estimates of all of your bills, and a list of all significant assets, for starters).

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60 thoughts on “Nine Things to Do When the Going Gets Tough

  1. Trent,
    I like the various options that you have listed here, but I would venture that even before the going gets tough we should be exploring these options.
    I especially think that we should all be looking into stating our own side business.

  2. brainy says:

    I dunno Tyler… I happen to have a side business — a relatively successful one — but it did take time and a lot of work to get going.

    Many times it sucked me dry financially before eventually taking off. Even to this day, sometimes the cash flow just isn’t there as I wait for payments (and related profits) to roll in.

    Thankfully I’ve never been in a dire situation such as the one mentioned, but had I been at the onset of starting my business, it only would have made matters worse.

  3. Khaki says:

    If you can’t sell your car, then actively look for someone to rideshare with. Even if you split the driving with someone one day per week (you drive this Monday/I’ll drive next Monday), you will save 10 percent of your gas costs. If you can do it more often or with more riders you can save even more!

  4. Ken Deboy says:

    Trent,
    All these seem like good ideas, but some need some thinking through.
    If a person is having trouble making their house payments and can’t qualify for a re-fi, another option would be a loan modification. It is cheaper than a re-fi and easier to qualify for. It could result in a lower (fixed) interest rate, lengthen the term of the mortgage, and (in rare instances) reduce the amount of principle owed.
    As for getting a boarder, I have a lot of experience with that, and a bad one can really be a problem. Due to “renter protection” laws in some states, it can also be a big problem to get rid of a problem boarder.
    As for declaring bankruptcy, I understand that some employers now do credit checks on job applicants, so for someone between jobs or thinking about changing jobs, this might not be a good idea.

    Cheers,
    Ken

  5. jm says:

    Whatever happened to that guy Minimum Wage?

  6. resonanteye says:

    Also, if you’re paying off a car loan, sell the car and get out from under. buy an older, reliable, ugly car upfront with whatever money you can raise. A $600 beater that will last two years is a better deal (if you can do minor repairs yourself) than a car that costs 200 a month.

    Luxuries. New cars, owning property, cable, extra gadgets, cds, movies, tv sets, tons of clothing, shoes, anything material that isn’t necessary is a drain sometimes.

  7. justin says:

    @jim

    His home built computer died and he can’t afford another one. lol

  8. Andy says:

    “If your gut response is “That makes life no fun!,” ask yourself if your debt situation is making your life fun.”

    Great line, Trent!

  9. Emily says:

    I think these are definitely great ideas. If Craigslist is big in your city, it can be a great way to find part-time gigs, including babysitting, house cleaning, house sitting, writing, etc. It’s also a great place to sell things, such as old furniture. Just say “you must come pick it up” so it’s less of a hassle for you. If you offer a good price, people will happily come get it from you.

  10. Sophia says:

    Off topic but related to the above two comments-I kind of miss Minimum Wage- while his comments bordered on trollish, and his negativity could be a drain, the fact remains that he was pretty much the only person bringing up a wholly different world view and perspective.

    Of course, from the moment I started reading this blog I knew that it was geared more towards spendthrift middle class members trying to be more responsible and reign in the consumer culture demons. Very little applies to you if you are already almost 100% strapped for cash, and you couldn’t imagine being able to blow money on ice cream at the store, much less an iphone. For that reason, Minimum Wage seems like someone complaining about there being no steak at a vegetarian buffet- it’s simply not the point of the offering.

  11. andrew says:

    great post Trent.
    there but for the grace of God could go any of us. A critical illness, accident etc. I think one of the biggest problems some people have is they do not face their problems, they just ignore them. One way I handle this is I do a projected cash flow which shows my expected income and expenses going out for six months. Its a work in progress and I’m getting better at it as time goes on. It shows when my yearly bills are due, insurance, house taxes to remind me to put by for them every month. it shows all my monthly fixed costs and all my income that I know is certain and estimates of other income. And then I have a line which shows how many days until i run out of cash. Not equity in my house, or overdraft I oculd draw on,or securities i could sell, or my retirement funds, none of those but simple cash related funds. Money in bank account, ING savings, and money I know for certain that I am going to earn. Whenever that figure starts to go near 120 days (my four month deadline) it starts to concentrate my mind that I need to do something.
    like the site, Trent, learn’t a few things, keep up the good work.

  12. Jules says:

    I could never understand why people think TV is necessary. Internet access is important because it can be truly educational and for me, it helps me stay in touch with friends and family. But TV? And a cell phone? I haven’t had a cell phone in over a year (the one I did have was a family plan, so when I left the US it was passed on to my sister). An MP3 player?

    I’m thinking of getting a second job, but I am concerned about time–it’s all I can do to get home in time to feed the cats, maybe bang out a page or two on my story, blog, spend time with my boyfriend, and feed the cats.

  13. JReed says:

    Cleaning business…need cash, flexible schedule, minimum start up costs? You can do really well with cleaning on the side. Work hard at it and you will have so much business, you’ll be hiring someone. Pick your customers…you want people who both work with no kids and minimum pets. Set your contract to include what you are willing to do (windows? trash removal? laundry? groceries?) and exclude what you won’t. Don’t take the first offer to come along, mkae sure the clients have the money to sustain the service weekly or biweekly. It is a great way to make money and get exercise at the same time.

  14. guinness416 says:

    I often wonder if I would have the discipline to cut well back early on in a situation, before it’s a full-blown crisis. It sometimes seems (with people I know, not sure about your correspondents of course) that they’re six months into a problem before the wheels have fully come off. Even small things like ditching the cable or transit pass earlier would have helped.

    I miss minimum wage too. I assume he’s around under another username, with less obvious flame-throwing.

  15. Boris says:

    “As for declaring bankruptcy, I understand that some employers now do credit checks on job applicants, so for someone between jobs or thinking about changing jobs, this might not be a good idea.”

    I agree with this statement. Declaring bankruptcy should be your last option. I would highly suggest getting a side job; preferably something that is both enjoyable and profitable. A lot of people seem to think that they don’t have the time (or perhaps the energy) to juggle two jobs, but in such tough situations, you really gotta muster up all the energy and go for it.

  16. Misty says:

    I wish I could get rid of our cable, and downgrade our internet, but everytime I bring it up to my husband he gets extremely upset, even when I tell him it would only be until I’m done with college (2 years), but he just won’t agree, no matter how I explain it. Does anyone else have a spouse/significant other, who understands the situation, but just doesn’t want to do anything to improve it?

  17. liv says:

    Wow, the going definitely got tough for this post. I prefer the second job. Some things are too hard to get rid of. If it’s the toughest time ever, then yeah, selling some stuff seems right.

  18. Anne says:

    Your suggestion of getting a boarder via local universities is really good. I worked in a med school admissions office for 3 years and we kept a binder of available housing options – including people who were looking for roommates or had a room to rent. Programs are also increasingly making a listserv available to incoming students.

    If you’re nervous start with the professional schools – med, law, dental, vet, etc. – you’re almost guaranteed to get a more serious and older person. After that hit the grad school. And often times once you’re “in” in a certain school you’ll get current students just passing the room/apartment/opportunity off to their friends without any advertising on your part.

  19. Lurker Carl says:

    I am amazed that folks get so close to the financial edge BEFORE taking a second or third job, selling off the clutter, cancelling monthly cable/phone/gym expenditures and trading down to cheaper housing and transportation. With low income folks, it’s easy to understand how even the smallest setback quickly snowballs into disaster. But those folks have been dealing with such issues forever, the working poor have zero wiggle room. But how do smart and successful middle class folks and higher, like Ed McMahon, end up teetering on the brink of bankruptcy? Is it denial or can they not see the forest for the trees?

  20. SBT says:

    Trent, for those who are out of work or who have a disability, you forgot to mention that there is help out there, despite all the cutbacks in recent years, and family who has paid taxes or will pay taxes is entitled to it. Look into free school lunches, child insurance programs, WIC, food stamps, free clinics. It’s a mistake to be too proud if you qualify.

  21. NYC reader says:

    Been there, done that, and more than once (but I’ll never do it again!).

    First, improve your cash flow by cutting expenses to the bone and increasing your income sources. Work on income sources for both short term (e.g. second job, selling off items, taking in a roommate) and longer term (study for a civil service exam, a promotion at your current job, certifications or degrees that will bring in extra income).

    Many times folks in this situation have financial problems brought on/exacerbated by limited job skills or skills that don’t match the current job market.

    Don’t be too proud and reject some kinds of work because you perceive they are somehow beneath you. Cleaning houses is an excellent way to make extra money, especially for folks with limited job and language skills.

    Don’t forget your local restaurants and fast food joints as sources of employment. They often have high turnover and hire quickly. They usually are eager to hire mature adults who will take the job seriously, as opposed to teenagers who may not care if they get fired. And it certainly helps that employees get a discount or eat for free while they are working.

    Sometimes the dire financial situation is brought on/exacerbated by lack of benefits (health insurance, sick days, etc.) that cripple a family’s finances. Look around for jobs which come with benefits; think about unglamorous jobs you might not have considered, such as civil service jobs (e.g. working at the DMV, delivering mail, collecting trash). You don’t have to work there forever, the job simply has to last long enough to get your financial situation stabilized and then you can move on to something else.

    I agree with all who say TV (cable or otherwise) is not necessary, even free over the air broadcasts suck time that you could be spending working on a money-making or self-improvement endeavor. You’ll never make a dime knowing who won this week’s episode of American Idol.

    Depending on the situation, Internet access at home might be important (e.g. e-mail related to job offers, selling stuff on eBay and Craigslist, coursework for school), but it often isn’t necessary, and it certainly doesn’t have to be expensive broadband or DSL. A cheap $9.95 dialup account is fine for the basics of e-mail and websurfing. The limited bandwidth will also deter you from wasting time watching You Tube and other high-bandwidth content. Most libraries have free Internet access, so it’s not very hard to do without Internet access at home. Some libraries let you plug your own laptop in or use their wireless so you won’t have to wait for an available workstation.

    Eat less meat (or no meat at all). It’s a very expensive item on the shopping list without as much bang for the buck in filling power and nutritional power as other food staples. Cut out the prepared foods from your shopping list, you’ll spend less money and eat healthier. Trent talks about the great things that can be done with beans. Pasta comes in hundreds of shapes and is very versatile. Eggs are relatively inexpensive. Soups and stews are easy and inexpensive to make, and can be easily stretched and morphed for multiple meals. Ditch the name brands and buy generics.

    Take care of the things you have so they don’t wear out and you don’t have to buy new. If you need a replacement major appliance such as a stove or refrigerator, don’t be afraid to ask people in your circle of family and acquaintances for used items when they are remodeling or upgrading.

    Sold your car? Your car died and you can’t get to Costco or the inexpensive supermarket to reduce your budget expenses? Trade your time and skills for car access. Many older folks have barely used autos, and they often need help with household chores and shopping. Sometimes they don’t feel comfortable driving. Offer to trade your labor (and gas money) for a shopping trip for both you and the older person. It might even turn into a social event, a weekly shopping trip with an older person who will appreciate the company and the assistance.

    Don’t be too proud to ask for assistance from your local religious/community food bank. If you qualify, apply for Food Stamps and WIC.

    Most important, when you get back on your feet and can relax a bit on your budget, make sure you give back to the community. Donate to the food bank. Invite a budget-strapped family over for dinner. Pass on your gently-used items to folks who could make good use of them.

  22. momof4 says:

    the area where we live has housing co-ops that have low rent as long as you qualify for it. They are nice townhouses with basements in a relatively nice middle class area of town. I assume they are subsidized. I friend of ours lived there with his wife while she finished college. He had a degree and a job, but as long as their income was below a certain level they had dirt cheap rent for our area. The rent was determined by income level, # of family members etc. It was a nice stepping stone for them and they were able to put quite a bit of money toward their student loans and save for a downpayment on a first home while they were there. I wish I had known about them when we were younger I always assumed (incorrectly) that you had to be on disability or living at poverty level to live there but that was not the case.

  23. Natalie says:

    I was in a similar situation years ago. I was going through a divorce, had 2 kids, and made $46,000 a year in the SF bay area.
    At work I took on every single opportunity I could in order to increase my responsibility so that I could move up and make more money. I ended up doing more work–but at the same salary.
    I knew I could not continue to live on that salary (not the lifestyle I wanted anyway) and had to do something. I used the tuition reimbursement offered by my employer and completed a technical certificate program (I had several others, but wanted to change fields). I also re-enrolled in college so I could complete my BS degree.

    Within 6 months of doing this, right before I completed my certificate program, I received a job offer that almost doubled my income. My advice: don’t stay where you are. Look for new career opportunities that will allow you to make more money. They do exist, and although it may take time, it will happen if you work hard, and stay focused and determined.

  24. GettingThere says:

    As a minister, we see people who come to the church needing help. Few, if any, are folks who we really can help. Most of the folks who come to us are the chronically homeless, looking for a night’s hotel stay so they can get a shower, or money for their next hit, or whatever we can give them. We help as we can, but we’re pretty good (from experience) at spotting the scammers who are calling every church in town.

    Where faith communities can make an amazing difference is in the life of families on the edge. Join the community. Give your time and talent to helping us help others, and let us help you. There is no loss of dignity when you’re giving in the way you can, and allowing others to give as they can. When we’ve had someone in the community hit a rough time, my parishioners have provided housing, employment, financial counseling and warm hugs. And when people find their feet again, they have a community in which to say thank you, and far more importantly, to share their hard-won good fortune with others coming up the same hill.

    The people who should ask us for help all too rarely do, often out of misplaced sense of pride. Don’t hesitate to talk to your minister or priest. They can’t solve all your problems; they may not have a lot of money to hand out; but the church can offer you a community in which you’ll find the support — of all sorts — that can make the difference.

  25. shahrul azwad says:

    Good advice, Trent!

    No shame, no blame. Lets solve the situation and starts over.

  26. !wanda says:

    There was a report that came out about a year ago, maybe, that followed many families before and after bankruptcy and specifically looked at their access to credit. After their bankruptcy, people were deluged with offers for credit, usually more than they were getting before the bankruptcy, and even from the same companies they were in default to. The situation might be a little different nowadays, because the credit situation overall is tighter, but a bankruptcy does not mean that no one will lend to you. (Bankruptcy will still affect your insurance and whether people will rent to you or give you a job, though.)

    Also, my understanding is that bankruptcy does not get rid of student loans, even private ones. If your crushing debt consists of a mortgage and student loans, and there are lots of people in that situation, bankruptcy might not help you!

  27. kazari says:

    OK,
    a couple other options to consider.
    can you switch jobs? i don’t know what the rules are in the US, but in Australia, your company will have to pay out any accrued leave.
    or
    Some companies will let you ‘cash out’ your leave, rather than take it.

  28. Mincot says:

    One of the sad things about the way housing is distributed is that often the working poor have to live far away from jobs. That further sucks their time and money–maintaining a car, even as a group, and spending time commuting. Where I live, commutes of up to two hours each way aren’t uncommon. Either that’s how long the bus takes to traverse a distance that one could cover in thirty minutes by car (thirty minutes is a short commute by Atlanta standards), or one is driving all the way out to Gwinnnett or Henry counties ….

  29. Kate says:

    I can understand that trimming the fat is essential but I would say that water in this day and age would be a necessity, not a luxury.

  30. RHJunior says:

    Well, this entire column was composed of economic advice ranging from the banal to the idiotic.

    We’ll start with the banal. “Get a second job. Start a side business. Get a boarder.” To which every lower-middle income struggler in America will say “DUH.”

    “Sell your home. Renting is cheaper.” WTF? Sure, if you happen to live in a high maintenance MANSION. But on average the mortgage payments and expenses on a typical home are on par with the cost of rental. You rent, you’re paying the exact same amount of money– and getting NOTHING in return, not even an extra point on your credit rating.

    Telling people to “sell their CDs and DVDs” in a pinch is stupid as well, albeit a stupid bit of advice less likely to cause a financial catastrophe. You can scarcely GIVE away old CDs and DVDs; you barely get a penny on the dollar for ‘em, even at best. So what do you get for selling off that pile of CDs you’ve been slowly accumulating over the years? Lunch money and an empty shelf… and eventually you’re going to want every single one of those CDs back again. People buy CDs, DVDs and own TV sets so that they can have stay-at-home entertainment rather than going out for the evening and blowing petty cash they can’t afford.

    “Sell your car.” Oh what the pan fried hell. Where do you live? You need a car for a hell of a lot more than just “driving to work.” Outside of hauling your groceries, your laundry, and all your other crap around, you need a car if you’re going to stand a chance pulling yourself out of whatever hole you’re in. Not having a car cuts out a LARGE number of employment options and makes most of the remainder a lot more difficult. And one of the big burdens of poverty is not being able to simply move to a more prosperous city or county or state— Or one with at least a lower cost of living index.

  31. doctorS says:

    I am no where near bankruptcy, just mounds of student debt, but I recently took on a 2nd job of refereeing basketball. Its seasonal and gets very busy during the season. People always told me that if I am short on money, get a 2nd job. I was stubborn for a while, but I am glad I did b/c it has made me work hard, appreciate every hour in the day, and help curtail my spending binges that have put me behind. Definitely a great option when the going gets tough. Great piece!

  32. Carlos says:

    Very good article, Trent.

  33. clint lawton says:

    great article trent. What I would do is just forget it all and go play a game off of http://www.free-party-games.com/icebreakergames.html (my side business) that makes me more than my “day job” and then I would go and read this article over and over till I get it. Life is not what you do with your money it is what you do with your time.

    Clint Lawton

    http://www.a-debt-free-life.com

  34. On cutting broadband: if you’re in Europe, trading in broadband for dialup could cost you big as local calls aren’t free. As a heavy internet user, dialup was my single biggest money sink until I traded it in for broadband.

  35. TParkerson says:

    I would have to agree that though this was a good post, it may not be as applicable to most of your audience, Trent, as most of us are probably actively engaged in these steps and others.

    I think that most of us have probably worked through our denial and faced the music of our various situations. Oftentimes, those in the most serious straits are still there because they refuse to face the denial and step forward. For instance, my DH has an employee who is about to lose his home to foreclosure. This man has a stable government job and makes a decent wage with benefits for the family, yet has “hocked” himself to his eyeballs. He has recently stated that the bank is not allowed to take his home because he has children…oh, my god!! Not only does he believe this but he has his wife convinced too…she, by the way, refuses to work. Needless to say, it is very hard for any of us to be very compassionate to their situation, since most of us have tightened our belts just to make sure our kids have a stable home.

    And, I think there will always be those ( like Minimum Wage perhaps) that are more content to take the time to kvetch about things than to use the time to try to fix them!

    Just my thoughts…

  36. FruGal says:

    Bankruptcy should be an absolute last resort step to take, as it will have lasting consequences for your credit record. Here in the UK, (I don’t know about the US), the first step should be to consider an IVA (individual voluntary arrangement), which is a six-year personalised payment plan to your creditors, with the interest frozen. It will also have a big impact on your credit record, but is nowhere near as detremental as a bankruptcy. But again, it should be an absolute last resort.

  37. Ro says:

    I agree with comment 18 about seeking help from a church if you truly need it. I work part time at a large downtown church with a whole department devoted to community ministries. They will help pay utilty and medical bills, give food that church members have donated, and provide a clothes closet. What really irks us is that people who truly need it rarely take advantage of it. But people who are working the system come all the time. Hard not to judge someone who drives to the food bank in a late model Escalade, wearing a Juicy Coutere outfit. But we do get some elderly folks who truly need it and it’s a wonderful ministry.

  38. battra92 says:

    Selling collections is very difficult but sometimes can be the best way to keep you going. My dad sold his coin collection when I was growing up during a period where we didn’t have much money. I know it killed him and quite frankly there are times he would love to have them back but he has since moved on.

    Unfortunately my collections are just vintage video games and while I could sell my duplicates (I do plan on doing so someday) there really isn’t all that much money in it.

    The second job idea is probably the best one that people don’t do. I’ve considered working a second job but frankly, I just don’t particularly need it. I’m on the right path out of debt (and I owe far less than most Americans and will have the student loan and car paid off in a year and a half) so I may do it just to “get rid of the debt” or to do some eventual upgrades to my life (I’m in dire need of a new bed) but we shall see what happens.

  39. Sarah says:

    I think the most difficult part for people is identifying at the time that they are at the point of things being tough. In my case, my husband and I moved across the country so he could attend graduate school, and our entire financial/life plan hooked on me being able to find a job that paid as well as the one I had left behind. (I hadn’t even made that much money to begin with.) A few months into it, I sucked up it and took the job I could get (minimum wage, fast food), but by that time both of us were angry. It would have made things easier, I suppose, if I had taken a minimum wage job the first week in the new place, but neither my husband nor I wanted to admit that it could be that bad. For what it’s worth … no car at the time, no cable, no mortgage, no kids. We split up, but every day I get to feel like a loser that I couldn’t do better than that stupid crap job. So, I wish I had correctly identified “tough” before we made the plunge and moved.

  40. K says:

    http://www.angelfoodministries.com offers a weeks worth of food for a family of 4 for $30. You can look up on the website the closest locations to you to pick up the boxes – usually at a church. They accept cash and food stamps, but there is not qualification process – anyone can buy it.

    I also agree with cutting out cable, cell phone, subscriptions cutting back to one or no cars. Try renting out a room in your house, or even moving in with family and renting out the whole house.

    You can usually come up with money to feed yourself but it’s the regular bills that drain you, so try to reduce those as much as possible.

  41. AnnJo says:

    Taking in (or being) a boarder is an option too many people reject out of hand, and I’m glad Trent suggests it.

    I was a boarder during college, saving tons of money over apartment rents. Then, the same day I started law school, my sister and I bought a house, a 4-bedroom, with a small down payment, a loan assumption and a real estate contract back to the seller. This was during a housing downturn in the early 1970s. For the next 12 years, I had boarders, starting with three, eventually declining to one as we prepared to sell. (My sister worked in another state.) It allowed me to go through law school and start my practice with effectively zero housing expense. The rent collected paid the mortgages, utilities, repairs and maintenance for all that time. The mortgages were paid off within 10 years and the house appreciated four-fold (of course, so did inflation), giving my sister and me each a 35% down payment on the next houses we bought individually.

    At the same time, my boarders, most of whom were college students or recent graduates new to the work force, got economical housing in a nice house near their school or work. Sometimes, if we had compatible schedules, we shared meals, saving even more. Granted, there were a few bad apples in the bunch, and the lifestyle requires some accommodations, but it can pay enormous dividends.

    I think it’s unfortunate that young people now automatically assume their first housing away from their parents should be a shared apartment. The cost is always higher than a boarding situation would be. Too often they are not as good at picking their room-mate as a more mature person would be, and they end up with higher costs than anticipated or an eviction and damage to their credit scores at a critical time in their financial lives.

  42. td says:

    I have a friend up until recently did not even have a car, yet had a job and attended classes at a college about 35 minutes away. What amazes me is public transportation is nonexistent here and she had no problem finding a ride even if it is from a stranger.

  43. money funk says:

    Check out this article from The Happy Rock: http://www.thehappyrock.com/2008/08/27/reader-stories-doing-what-it-takes/

    Great, great advice for people who are facing the bare minimums.

  44. Robin says:

    Great post. Sometimes bad things happen to good people, and sometimes bad things happen in threes. We are putting bills on credit cards and hoping for a check in the mail. My son ws recently diagnosed with a developmental disability (autism) and that has sunk us, financially and mentally. We need all the help we can get and you have help, so thank you.

  45. DaveOR says:

    Trent, I assume your list was not in a specific order. Really like your site. Too bad financial education in our consumer based country is so poor (pun intended). If it were better it would save people a lot of trouble as well as money.

    I work in finance and it’s stunning how long and far down people get before they cut back on anything. So cut back early, think non-essential, and recurring & non-recurring items.

    So in some order:
    Recurring spending. Cut the cable, high speed internet, gym membership, and the unlimited high cost monthly cell phone plan. If you need internet, go slow & cheap or to the library. I have spent well under a $100 a year on my prepaid cell phone.

    Sell your car if it has monthly payments – if you’re upside down do whatever you can to come up with the difference and get out from under it. You should never be significantly upside down in loan to value if you carefully buy used from a private party and do basic preventative maintenance. If you don’t have payments, keep the car, but park it and car pool, bike or mass transit and tell your insurance company to cut your rates. Then use it to Deliver Pizza. – you don’t have the money to go out of Friday or Saturday night anyway, they like more stable employees with decent driving records and the tips can be very good.

    Non-recurring. Don’t spend. No coffees, lunch out, dinner out, new clothes, and use a shopping list. If you need to splurge, buy better food to cook at home. Get rid of all but one credit card for emergency use only.

    Recurring income: A second job is much quicker and easier money than starting a business. The business has better income potential but may be slow to get going and have start up costs. The best would be to get a job doing what you may turn into a side business. Also think of things you are good at that can be bartered with your mechanic, etc so that you have options for the unexpected.

    Non-Recurring Income: Sell your junk – most of us could get rid of some clutter, maybe you’ll make enought to get out of the upside down car payment. Do it quick on Craigslist before you kill the high speed. Or just have a yard sale.

    I know this is basic and repeats some other ideas – but that’s what it takes. No rocket science required. Also if people see you trying, doing the right things, cutting to the bone, they’re more likely to help you – give you a ride, hire you for some cleaning, offer payment plans, tell you about jobs, etc. Don’t underestimate this potential. People will help if you’re helping yourself. Think about it, who do you offer help to… and don’t go right back to old spending habits as soon as you have an extra buck.

    Want to go beyond basics and get tough…
    Pets ain’t cheap.

    Good Luck.

  46. Sara says:

    Another great thing about getting a second job is that it takes up a lot of the time you might otherwise be tempted to spend shopping, watching cable, surfing the internet, or doing whatever it is that’s costing too much money.

  47. BonzoGal says:

    @NYC reader,comment #16: “Don’t be too proud and reject some kinds of work because you perceive they are somehow beneath you.”

    I second that! I was laid off from a job I loved in Marketing, and after weeks of job-searching I took a temp job at my old company in Customer Service. I hated that job- lots of dealing with tense customers on the phone- but it put me in the right place to snag up a job that opened up- the company didn’t even put out a job announcement to the public because I was “on the spot.” Now I’m still working at the same company six years later, we’re doing MUCH better, and I adore my new job. I probably wouldn’t be here if I hadn’t decided to go ahead and do a much lower-level job than I’d had before.

  48. Nick Wright says:

    I’m glad you mentioned selling your car as a way to save money.

    I recently switched jobs so that I could go back to college. The job that I had pretty much required that I own a car.

    My wife and I bought bicycles and used those every time we could. But when I switched jobs, I found I didn’t need to own a car.

    Then one day I sat down and figured up what it was costing me to own a car.

    I was shocked to find that the regular yearly bill for my car that I owned outright, allowing myself $50 a month for gas (not very much at all in this day), and budgeting for no major repairs (what a risk-taker I am) was almost $3,000.

    So after talking it over with my wife we sold the car. So it’s now two months later and I can count $500 that I haven’t spent on a car.

    And we don’t miss it one bit. We’re in better health than we’ve been in years, and being car-less has helped us to save money in other ways too. You don’t make so many impulse buys when it takes a lot of effort to get to the store in the first place!

    For those of you who don’t think you can live without a car, you might try reading “How to Live Well Without a Car: Save Money, Breathe Easier, and Get More Mileage Out of Life,” by Chris Balish. It’s a great book.

  49. deepali says:

    This not a knock on the readership here, but it is interesting to me that some of these are considered things to do when times are tough. Some of these are luxuries that we assume are necessities.

  50. Natalie says:

    Hi Trent,
    I’ve been reading your blog for quite some time and I love it. I just got married, and my husband and I are very blessed to not be in this situation. However, he brought $60,000 in debt to the relationship (I had none), and we both have some poor spending habits.
    However, I am much more interested in getting out of debt ASAP so we can buy a house and start having kids (our goal), while he is kind of lethargic about it. We took Dave Ramsey’s Financial Peace University at our church, and while I thought he had some great ideas, my husband wasn’t so interested.
    I guess what I want to know is, how can I get my husband to tackle our debt repayment with “gazelle intensity” (as Dave Ramsey would say)? I would love to cut out the cable, learn how to cook, stop buying stupid stuff and live frugally, but my husband resists- as if I’m asking him to cut off his arm!! He really wants to be out of debt… but he doesn’t want to do the work. Any suggestions?
    PS. We’re renting a pretty cheap apartment and both have a pretty average income. We do have an emergency fund, at least.

  51. Andrew La Barbera says:

    For crying out loud,what a bunch of nitwits!!! You do with your money what you want to do,leave others to handle THEIR own money the way they see fit!! Talk it over with your aunt,then accept whatever she wants to do,PERIOD!!

  52. Jane says:

    Trent: In my area, mortages are cheaper than rent. It might be a good idea to move to a smaller or cheaper home and pay less for a mortage payment, but selling the home and then renting would be more expensive in this area.
    Just my $0.02 worth.

  53. Rob says:

    As a former collector, I can’t overstate the importance of keeping in touch with one during trouble. Keeping the lines of communication open provides both sides with options. In five years, I never had to intiate legal action against someone I’d actually talked to.
    (Which is not to say you should meekly accept what you feel is abusive or threatening behavior from one. Third party collectors are held to the Fair Debt Collection Act, and most other agencies adhere to it’s rules as policy. If you feel someone has crossed the line, you should take action according to the Act’s guidelines, speak to a supervisor,contact the lender by mail, etc).

  54. LindaT says:

    Re – andrew in comment 11 –
    Any chance of finding our more about the way you are handling your finances? Did you create the program you use or will you share the name of which one you are using? Do you write a blog where we could get additional info and ideas?

    Thanks for what you do Trent. It helps more people than you know
    Lindat

  55. Astreil says:

    Trent,
    I have done, plan on doing, or tried earnestly to do all of your suggestions. However, in order to stay sane, there must be some cheap recreation. If I was fortunate to own a set of Dr.Who DVDS, I would not sell them for the world, as they take me out of this one. Right now, I rent one Dr. Who DVD about every two weeks for $2.71. (That’s 2 to 4 episodes) If I do it on a Tuesday or a Wednesday, it’s 2 for 1. Yes, it could be called frivolous spending, but being in debt is no fun. I can have hours of recreation with my family for less than a coke and a candy bar. Frugal, yes? Just don’t ever think I could part with the good Doctor.
    Astreil

  56. BW says:

    I agree with others on this thread that assistance from government and churches are good avenues to pursue. In fact, they may be preferable steps to take before attempting the last one on the list (declaring bankruptcy). Then when you’re back on your feet, you can give a helping hand to someone in the same situation.

  57. katy says:

    Excellent Trent; you’re speaking my language.

  58. katy says:

    I also want to mention a book that helps me, HOW TO GET OUT OF DEBT, STAY OUT OF DEBT AND LIVE PROSPEROUSLY by Jerrold Mundis. Basic tenets of DA

  59. Sally says:

    For a second job, Starbucks has an excellent record. It’s popular with college students for flexible hours, good pay, paid training, and benefits for part time employees.

  60. ShantyGal says:

    My sister got her minister’s license online and performs weddings. At $150+ per ceremony, she is pulling in, on average, $600/month extra income which is keeping them afloat.

    It’s sad to read some of the comments here from those with spouses who are both deep in debt and denial. Fortunately my spouse and I are aligned financially.

    I have recently become disgusted at the thought of shopping. I see Target/Walmart/Etc. as full of junk that will eventually go into a landfill somewhere. Cut back, live below your means, spend your hard-earned $$$ on what you truly need and love, share with friends, barter, etc BEFORE you get in dire straights. More stuff will NEVER make you happy.

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