Debt Articles

What to Do When You Can’t Make Ends Meet or How to Stop Robbing Peter to Pay Paul

It’s unfortunate that at times the monthly financial demand exceeds the money coming in. On an occasional basis and with some money tucked away in a savings account or emergency fund these unexpected events can be less than a blip in our lives. But when continued demand exceeds our financial supply or when we have no reserves to tap in an emergency, greater problems occur.

Photo by Major Clanger

If you have found yourself in a situation of not being able to make ends meet and keep up with your bills my bet is this did not happen overnight. Typically these situations are caused by one or more of the following events.

  1. Increased financial demands over time. Either more loans, higher rent or mortgage, increased taxes, higher insurance costs, higher energy costs, child goes off to school, etc.
  2. Decreased income through the loss of a job, hours cut back, job changed, reduction in pay.
  3. Accident, illness or injury. An event beyond your control and not seen which impacted your life in a negative way.
  4. Theft, robbery, or loss at the hand of another.
  5. The arrival of a baby and the increased costs that go with that.
  6. Having to become a caregiver and sacrifice your own demands for the needs of another.

What’s The Solution Steve?

Money problems are solved by either increasing income, reducing expenses, or a combination of the both. If you can increase income a bit and reduce expenses a bit then the combination of those two adjustments may be enough to bring you back to a point of financial equilibrium.

But for most people an increase in income isn’t possible so we need to look at reducing expenses.

Expenses That Can Be Reduced

These expenses are typically the largest in the budget and can be considered for reduction or elimination.

  1. Mortgage – Hand the house back to the bank if you have to and rent for less. Renting is less expensive than homeownership and while you are not building equity you are also not paying taxes, making repairs, paying for maintenance or upkeep. You also don’t need to worry about trying to sell a property in a down economy if you do need to move.
  2. Car Payment – After the mortgage payment the car payment is commonly quite large. If you can’t afford the car payment consider handing the car back to the lender. They’ll come after you for the balance so we’ll have to address that later.
  3. Private School – This is always a difficult expense to consider cutting back on. It’s filled with guilt and excuses but it is an optional expense and there are ways to make public school work with private school is not affordable.
  4. Boat, Plane, or Second Home – For most people these are all optional expenses and not required to live life. Hand them back to the bank.
  5. Credit Card Payments – The first step to reducing credit card payments is to call your bank and see what special programs they might have to help you pay less. If they have nothing and you can’t afford the continued payments it would be a mistake to drain retirement accounts or assets to keep making them. That’s not a solution, that’s a sure way to simply wind up in debt and broke.
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Expenses That Can’t Be Reduced

These expenses should be off the table when considering reductions.

  1. Health Insurance – While you might evaluate if changing health plans might be possible so you are not overpaying for coverage, cutting health insurance out if a huge bonehead move. All it takes is one unexpected illness or accident and you can be financially wrecked.
  2. Property Insurance – You need to maintain insurance for the the loss or destruction of your property. A good insurance company will replace your home or belongings in case of a loss and the cost of insurance will be far less than having to buy your stuff all over. This also includes vehicle or car insurance. Make sure you maintain it.
  3. Relocating to an Unsafe Area – Sometimes to reduce expenses you may need to move or hand back the house to the bank but that doesn’t mean you should move to a less safe area just to save money. instead, cut something else out.
  4. Healthy Eating – You need to be able to eat more than ramen noodles once a day. Going without a suitable diet only leads to other health issues.

Expenses That Can Be Reduced But Need to Remain

The following expenses can be reduced but not cut out entirely.

  1. Fun – A life filled with deprivation and lack only leads to depression and feeling like you can’t go on. Going to a movie once a month or out with friends occasionally is a healthy thing to do.
  2. Beauty – No matter if it is a special salon treatment once a quarter or a little splurge on fresh cut flowers, there is room to maintain things in your life that bring you some joy and appreciation.
  3. Saving – Even in times of financial difficulty you need to still put money away each month. The ability to save is what will help you prevent a repeat of the situation you are facing right now.

Are There Programs That Can Help Me?

First, the free stuff. I have written a series of books that can provide you with a plan, a guide or direct insight into what you can do to break out of this downward spiral of debt. Click here for my free books.

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The most common solutions that are available to consumers for financial problems are credit counseling, bankruptcy, and debt settlement.

All of these solutions have a time and place but no one solutions is a magic wand that can address all problems.

Credit Counseling

Credit counseling is a reasonable solution if you can afford the monthly minimum payments on your unsecured credit card debt but just want lower interest rates. You can click here for credit counseling information.


Bankruptcy is the only legal solution that your creditors have to abide by. It will stop lawsuits, judgments, wage garnishments, etc. You can hand homes and cars back to the bank and discharge any remaining financial liability in bankruptcy. Once you file bankruptcy collectors can no longer call you and your debt can be wiped out in a matter of months. No matter what preconceived ideas you might have about bankruptcy you absolutely should meet with a bankruptcy attorney and discuss what bankruptcy would mean for you in your situation.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

And don’t worry about your credit with bankruptcy, it can be rebuilt using my free guide.

Debt Settlement

Debt settlement was sold by many as some magic solution that would cut your bills in half and let you make tiny payments in an effort to repay your debt. Most of the information people have heard about debt settlement is simply not true. In debt settlement you will be in aggressive collections, can be sued, can have your wages garnished, your credit will be shot, and you may have to pay income tax on the forgiven debt.

However, if you have or will soon have money to repay about 50% of what you owe then a debt settlement program may be one way to attempt to negotiate with your creditors to accept less than you owe. Just be aware, you may owe income on the forgiven amount with bankruptcy.

Be Sure to Read This

If you are considering credit counseling, bankruptcy, or debt settlement then you should read this guide first, The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • My husband and I Iave no debt except our mortgage. The house is paid off in under 5 years, so letting the house go into foreclosure is not an option. He works and makes a decent income for our area. I am currently receivig unemployment since I lost my job almost a year ago. Honestly, I have more money at the end of the day now than I did working since I no longer have huge daycare bills. We do not eat out, we have two older vehicles that are owned free and clear. Our monthly utilities and life insurance are the only bills we have. We cannot make ends meet. We are the family eating mac and cheese and hot dogs, I cannot afford groceries, I am almost out of hme heating fuel(coal) and there is no money to buy any.  We make just a hair over the income guidelines for Welfare. I am ready to give seems hopeless. What can we do?

  • I’m glad you don’t take the opinion some debt counselors give – that you should pay off debt without saving.

    It sounds great – pay off debt sooner, then save. Except if something happens and you find yourself unable to pay a month or two. Or, to get out of debt and find yourself in a financial situation where savings would have been useful.

    I’m still paying off my debt but also trying to save money. I feel a bit more secure, having funds stashed away somewhere.

  • I’m glad you don’t take the opinion some debt counselors give – that you should pay off debt without saving.

    It sounds great – pay off debt sooner, then save. Except if something happens and you find yourself unable to pay a month or two. Or, to get out of debt and find yourself in a financial situation where savings would have been useful.

    I’m still paying off my debt but also trying to save money. I feel a bit more secure, having funds stashed away somewhere.

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