What To Do If Your Spending Is Greater Than Your Income

When I was 22 years old, I moved to Cuenca, Ecuador to teach English. 

It was my first full-time job out of college, and I was realizing simultaneously that paying my own rent, groceries, healthcare and transportation was hard AND my teacher’s salary was not cutting it. 

If you’ve ever been in the position where your spending exceeds your income - I feel you. It’s really hard. 

But, I don’t believe that any problem is insurmountable. You’re going to have to work hard, but digging yourself out of the hole is worth it. 

5 steps to follow if your expenses are more than your income 

1. Breathe 

If you are in a state of panic about your finances, you won’t be able to keep your head clear enough to find a solution. 

Take a breath. You are NOT the first person this has happened to. You have millions of companions. 

Your finances are NOT the worst in the world. Someone else out there has it worse than you. 

Your income is less than your expenses and you are slowly (or quickly) eating away your savings. Acknowledge to yourself for a moment that this sucks. 

Ok, ready? 

Let’s go.

2. Negotiate for a higher salary.

Negotiating is one of the most terrifying things in the world. I’m not going to lie to you and say it’s easy.  

Even thinking about asking for a raise may be enough to give you a stomach ache or panic sweat. 

But it’s also one of the simplest ways you can increase your income, without putting in any extra time or effort. If you can get more money for the job you are already doing, it can be a fast and easy way to push your income higher than your expenses. 

3. Take on a side hustle. 

If you get a big fat “NO” in your salary negotiation, a side hustle is another good option. 

However, side hustles are a little more complicated because you need to find one that is easy for you to do, fits into your schedule and makes you enough money to give you a serious bump in your monthly income. 

Weekend dog walking, driving for Uber, or working a weekend shift at a Starbucks could give you a couple hundred bucks a month to provide some more wiggle room in your budget. 

4. Shrink your bills. 

Here at Imperfect Budget, we don’t preach deprivation. Living a comfortable and pleasurable life is something I desire for everyone. 

But if a salary negotiation or side hustle don’t work out, it might be time to take the ax to your expenses (at least temporarily until you get things under control). 

Start with subscriptions. Chop the streaming services, grocery deliveries, Amazon prime. 

Then move onto any additional “wants spending”. Shopping, gym memberships, take-out.

Call your utilities companies and ask if they’d be able to lower your monthly bill. Most utility companies have programs to help you make payments. 

Move. If it’s winter, you can often get good deals on apartments because no one else wants to move during winter. Move to a smaller apartment in the winter and sign a 12 month lease. You’ll probably save hundreds of dollars a month on housing costs. 

Time to get hard-core with your budget and make some serious cuts. Remember, once you get your expenses under control and increase your income, you can start to add these expenses back in. This is just a temporary cut back until you can increase your income. 

5. Take a look at your debt.

Finally, time to take an honest look at your debt. Did you know that most people with debt do not know 1) how much debt they have, 2) when their debt pay-off date is? 

Don’t let this be you. 

If you’re not sure, call the company in charge of your debt. You should be getting statements that show the amount and interest rate. 

Gather up all the information you have on your debts and make them into a list: 

Organize all of your debt into one list. Then work to pay it off using the snowball method or the avalanche method.

If you have increased your income through negotiation or taking on a side hustle, and decreased your expenses through some serious hard-core chopping skills, you should have some extra income to start working on this debt. 

You can use the snowball method by starting with the smallest amount of debt or the avalanche method by starting with the highest interest rate debt. Whichever method you choose, just make sure to put as much money as you can towards paying down that debt. 

In the long term, paying off your debt will mean less money wasted on interest, and fewer payments you have to make on a monthly basis, freeing up more discretionary income. 

So what’s the point? 

So, you’ve asked for more money at your job, gotten a side hustle, cut your expenses down to the bare bone and you’re working to pay off your debt. The question is: 

Now what?

Why are you even doing this?? 

First, so you can stop treading water with your finances and finally start to swim. Worrying about how to pay your bills leads to a lot of stress in your day-to-day life. Giving yourself more breathing room with your money will reduce your amount of stress. 

But, more importantly, it will also give you the freedom to start having fun with your money!

Whether that means going out to dinner with your friends more, indulging yourself on Amazon a couple times a month, getting groceries delivered or taking an amazing vacation, the point of all of this hard work is so that you can add more pleasure into your life. THAT’S what money can do for you.

Your life may not be perfect, but it is imperfectly yours. The only way to live it is your way.