by Pamela Baum

Created on: April 16, 2009   Last Updated: September 08, 2009

Stretching a low income involves making hard choices. If you can't pay the bills, you must cut expenses. Successful strategies include deciding what you really need, downsizing extras, and finding alternatives to spending. Use these strategies to ride out your financial difficulties until times get better.

Decide what you really need.

In order to make changes to shrink your budget, you must know where the money is going. Save your bills and make a list of current expenses. Include payments that are charged to your account automatically every month. Keep your receipts and figure out how much you and other family members are spending now.

Divide these expenses into two major categories: necessities (things you must have in order to live), or nonessentials (things you could get by without). Typical necessities may be housing, heat, food, clothing, school, and transportation.

Nonessentials may include things like cell phones, cable TV, subscriptions, or an extra vehicle. It may be tough to decide whether an expense is necessary or only an extra, and you may have to argue over sticky items with a family member. But once your income slides too low to pay the bills, things you once enjoyed may become too expensive to keep.

After all, what's the point of paying for a fancy piece of furniture, if you don't own a living room to put it in? Remember that basic needs take priority over extras. For inspiration, think of our wild birds and animals: they are happy to enjoy merely food, water, and shelter in a safe environment.

Shrink and Downsize

Next, downsize the nonessentials you have identified. This may mean selling a vehicle, cancelling a subscription, switching to a different phone or TV plan, or even moving to a new home.

Also strive to shrink your utility bills, a major chunk of any household's budget. Unplug that second refrigerator, walk or bike instead of driving, lower the thermostat (or raise it in the summertime), and turn off what you're not using. As a plus side, these cost saving strategies will help you to live more green.

In addition, look around you for items that may be turned into cash. What do you own that is costing you money? Is there a big ticket item that you don't really need? Run a classified ad, sell it on eBay, or have a yard sale.

Downsizing also includes applying for outside help, if you are eligible. Low income people may receive help paying for food from the U.S. food stamp program, or from the WIC or school lunch programs. Others may be

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