Photo by Fido Dido
Maybe you’ve been working on your zero-based budget, and really giving this whole financial sanity thing the college try, but keep coming up short. There’s just not enough to go around! You’ve added up your expenses, and checked your income, and instead of being left with zero, you’ve got a negative balance! You cannot stick to a budget, you see, because your budget is too small! There’s not enough money coming in to balance everything going out! What now?
This is not the time to panic. This is the time to take a deep breath and listen to me: it is going to be OK. I promise. It is going to be OK, and you are not a bad person. OK? I have been where you are, and I pulled myself out of it. And if I did it, then you can do it. Do you know what I did? Let me start by telling you what I didn’t do. I did not use more credit cards to make up the difference. I did not cut everything out of my budget except bills and payments and try to exist on free food given to me at graduate student union meetings. I did not listen or give credence to the threats made by rogue collectors. I did not let the mess I made take me down.
Oh it was hard. Very hard. It’s very hard to keep your chin up when it feels like everyone’s against you and you cannot catch a break. But all you have to worry about right now is what Dave Ramsey calls The Four Walls. If you focus on the Four Walls, we can get the rest of the financial picture in order. Without the Four Walls, the house comes crashing down.
The Four Walls are: Food, Transportation, Shelter, and Utilities. These are the cornerstones of a sound financial foundation. You cannot survive and work without these budget categories being covered. There are of absolute importance, and everything else should go behind them when you are in a dire straits financial situation.
What does this mean? This means, I don’t want to hear about you paying Citibank (wait, bad example, I’m not sure if they’re still in business–see, even credit card companies cannot always pay their bills! Suckers!) instead of eating. It also means I don’t want you paying a medical bill over your mortgage. Or a gym membership. Or shopping for Christmas presents to make it seem like everything is fine and dandy to everyone else. If you are hurting, then your only obligation is to cover The Four Walls. After they’re covered, then we can talk about what to do with the rest of our budget.
To clarify, The Four Walls include:
- Electricity
- Car payment
- Gasoline
- Water
- Car insurance
- Rent or Mortgage Payment
- Groceries
- Baby formula
- Diapers
- Medicine (that you take every day)
The Four Walls do not include:
- Cell phones
- credit card payments
- gym memberships
- Netflix
- Date night
- 529 Accounts
- 401ks
- Student Loan Payments
- Clothes
- Old, past due bills for things unrelated to The Four Walls, even if you’re getting collection calls
- Payments on Flat Screen TV
- Christmas presents
- Birthday presents
- Etc.
Now, if you have gone through your budget and cannot meet The Four Walls on your income, then you have to take drastic action. Still, you do not need to panic. You might have to sell your car and get a cheaper one with no payments. You might have to find a cheaper place to live, or get a roommate. You might have to get an extra job delivering pizza or something like that. But you can do it, and we will talk about how in the next few weeks.
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