by Reid Case

Created on: November 13, 2009

What a frustrating thing personal finance is! Most of us are not born to extremely rich families and therefore must budget, skimp, and save. What happens when your cost of living exceeds your income? How can you cope with bills that are higher than your earnings?

Take a step back and look at your entire financial plan, if you have one. The lack of a plan may be, in part, the reason you are in this mess. Set some goals for yourself, your family, and your income. Common reasons why an individuals income may be overpowered by their expenses is the American consumer behavior. It will take some drastic steps to get out of this situation, but it can be done.

First you must look at your consumer behavior. Are you buying things you need, or is your check book balance ledger speckled with impulse purchases and lavish expenditures? This may be a habit that is difficult to break, as shopping can be addictive. Not to mention marketing and advertising seems to encourage this impulsive behavior. The big concept here is STOP SPENDING! If you have the long term products you need, take a break. For example, winter is approaching and already here in some places; do you really need a new coat, boots, hats, scarves, and gloves? Most likely the clothing you purchased last year is still completely functional, although not in vogue. Ask yourself, in this situation, is it more important to impress and project your couture image, or would you like to file bankruptcy? This can also apply to the regular, and necessary, expenses. You may have a sweet tooth that can only be quenched by gourmet chocolates and ice creams. Although the store brand, and common brand, products may not taste, to you, as good as those expensive ones, there is something to say for the saving that can be found purchasing them. One thing to remember is that this frugal living situation may only be temporary.

Look into your bills to identify where they can be reduced. Student loans payments may be reduced by income sensitive payment plans, cell phone bills may reflect old contracts that you never renewed. For example, that cell contract you opened 5 years ago still serves you well, take a trip to your local outlet. Glancing over the newer plans may reveal that your old plan is still offered yet at a much lower rate. As technology and demand increases, the cost of service from these providers decreases. Most major service providers will allow for contract changes after the normally 2 year period of the original

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