Getting to the End of Your Money Before the End of the Month? Here’s Why… (And How to Fix It)

I’ve prepared hundreds of bankruptcy petitions over the years, and one of the most common areas of discrepancy are household and personal expenses.

Once I’ve calculated someone’s monthly income (using an average of the past 6 months’ pay stubs) I will compare it with their stated monthly expenses.

Without fail, there always appears to be money left over at the end of the month, even though my clients are quick to correct me,….”No,” they definitely do not have money left at the end of the month.  In reality, they’re usually short on cash most months, which is what led to their mounting debt in the first place.

But why are so many people under-reporting their expenses?  How have we become so out of touch with our spending habits?

In my experience, we’ve all become very disconnected from our money as a result of our reliance on debit cards and online banking.  Day in and day out we swipe our debit cards, but aren’t keeping track of the account balance.  Meanwhile, automatic debits and bill payments, while keeping our bills up to date, are often forgotten about when making purchases that we really can’t afford.

So, here are a few tips to help keep you out of the red each month.

1. Make a Budget

Writing a budget is a truly underrated and underutilized financial management tool.  If you force yourself to itemize all of your bills and expenses, you’ll have a better understanding of why (or where) you’re coming up short each month.  During this process, make sure to review your bank statements carefully (3-6 months) to help you identify bills and expenses that you may have forgotten about, or that aren’t necessarily paid every month, such as subscription services you no longer use, insurance policies that renewed, and utilities that are billed quarterly.  The most important rule of budgeting, you cannot spend more than you take home.  If you spend too much, you either have to increase income (i.e., get a second job) or reduce your spending.

2. Use Cash

Once you’ve completed your budget, you should know exactly how much money you have “left” at the end of the month after paying your bills and necessary expenses.  These are what we call “discretionary funds” and you should put some of it aside for savings (for an emergency or rainy day).  The rest is yours to spend as you like, for recreation and entertainment, including eating out, going to the movies, or spa and salon services.  However, if you’ve allocated a specific sum of cash for the month, and run out early, you’ll have to sacrifice for the rest of the month.  If you continue to spend you’ll never get out of your hole.

Having cash in hand makes it easier to see how much you have left after each purchase, and when you’re about to run out.  Otherwise, you have to commit to checking your online banking every single day.  The most important thing is to be honest with yourself.  If you know you’re not going to check online daily, use the cash method.  It actually takes much less commitment.

3. Follow the Envelope Rule

If you’re trying to build (or re-build) credit, you’ll want to use credit cards regularly and responsibly.  A good method is to use the card a few times every month to replace purchases you would otherwise make in cash.  However, you have to pay off your balance (in full) every month.  This way, you show a positive payment history but don’t carry a balance subject to high interest (that can easily get out of control).

So, instead of paying cash for gas or groceries (and instead of using your debit card), use your credit card but then immediately put the cash in an envelope and set it aside.  This way, you’ll have funds available when it’s time to pay the bill.

4. Reduce and Eliminate Unnecessary Expenses

Take a look at your bills and determine if there’s room to reduce or eliminate.  The most common bills I see that get needlessly out of hand are related to cell phone plans, cable/internet/satellite packages and media subscriptions (e.g., Pandora, Netflix, etc.).  Even though we’ve all come to rely on these products and services, they are not strictly necessary and therefore are the easiest to eliminate.

5. Reduce and Eliminate High Interest Rates

If you have a poor (or mediocre) credit score, chances are you’re paying a lot more for things like auto loans and car insurance.  That’s because lenders and insurers increase interest rates when you have a poor credit history (you’re considered to be less responsible and therefore a higher risk).

Rather than just accepting this fate, take action: (A) Utilize 0% balance transfers (if you have them available); (B) clean up your credit report; (C) refinance high-interest car loans.

You may not realize it, but bad credit can costs you tens of thousands of dollars in additional interest if you’re not careful.  If you don’t want to take my word for it, speak with my friend, Hope Dukes.  Having worked in the car finance industry for many years, she understands why you’re paying more and knows how to help you save money.  For more info, visit her website: 

6. Be America’s Next Master Chef

One of the biggest expenses my clients have tends to be their food bill.  But only because they’re eating out and/or ordering in 2-3 meals a day, every day.  They’re always quick to tell me that their not eating at “fancy” or “expensive” restaurants.  However, even a $10 meal, once per day, will add up to $300 each month.  Let’s be honest, that could cover your car payment!

In my experience, the average single guy/gal is spending about $700 each month on prepared food.  For the average family of four it’s over $1,000!

Instead, make a grocery list (after consulting the weekly circular/coupon book) and pick up all the food items you’ll need for the week to prepare your own meals.  No time, you say?  Well, you’ll have to make the time (sacrifice) if you want to get out/stay out of debt.  Personally, I do most of my shopping and meal prep on Sunday afternoons while I catch up on my favorite Netflix episodes.


If you’ve been struggling with debt, know that relief is available.  Bankruptcy wipes the slate clean, offering a fresh start and a second chance.

Still unsure about Bankruptcy?  Read through many Frequently Asked Questions: 

Dispel all of your bad notions about Bankruptcy!  Read Bankruptcy Myths Debunked!:




Call: (908) 353-6700    Text: (908) 266-4843    E-Mail



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