FIXED INCOME

How to Live on a Fixed Income

Fixed incomes are not only for senior citizens. If you or

your spouse have lost a job, are in school, are recovering

from an illness, just had a baby, or have mounds of other

debts, you may be living on a fixed income. Creating a

budget to live on a fixed income will allow you to live

within your means and eliminate spiraling debt.

    

Step 1

Sit down with your spouse, make a list of each of

your expenses, and set them against your income. Work

together to set a spending budget, and to see where you

can cut your expenses. For example, examine whether you

really need all the premium cable channels, and if you can

take your lunch to work instead of going out. Rent movies

instead of seeing them in the theater. Unplug appliances

when not in use, such as your cell phone chargers and

your microwave. You may be surprised at how much you

can save by taking small steps to cut expenses.

 

Step 2

Write down every single dollar you spend. Keep a

running list handy, so each time you buy a candy bar,

clothes, gasoline, gifts, coffee, lend a friend $10, etc.,

write it on the list. This will help you to see where each

dollar is going.

 

Step 3

Set aside money each month for your inflexible core

expenses, such as mortgage or rent, phones, insurance,

installment loans, gas, and electric. These expenses are

your first priority. Other expenses such as food, gasoline,

and entertainment have more wiggle room to adjust, based

on your fixed income.

 

Step 4

Withdraw cash from the ATM once a week—and only

once a week. Factor spending money into your budget,

and do not make multiple trips to the ATM if you run out

of cash within the week. Don’t think of the ATM as an

endless money tree. Always be aware of how much is in

your bank account by checking your balances online.

 

Step 5

Use cash or a debit card for all purchases. If you do

not have the cash—do not buy it. In other words, do not

rely on credit cards for purchases. This can easily lead

you down the path of spending outside your budget, and

buying things you cannot afford.

 

Step 6

Sell or trade in your car if you cannot afford the car

payments. Try to survive with one car, or buy a less

expensive car outright, using the money from the sale of

your car. If that’s impossible, buy a used car with smaller

and shorter car payments. Set an amount you can afford to

pay before going car shopping, and don’t be pressured by

a car salesman who knows nothing about your financial

situation.

 

Step 7

Talk to your spouse about why you are on a fixed

income. One of you should try to bring in extra income

to your household. Get a part-time or second job if your

expenses exceed your income. Take a waitress shift, do

data entry, take a shot at freelance writing or selling your

crafts.

      By Kingalu Avin
            BAPRM 42697