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High finance for lower incomes

When her family's income shrank drastically, she was forced to get serious about managing money. A 3-ring binder is one of her tools.

By Karen Datko Jan 19, 2011 1:38PM

This guest post comes from I am the working poor.


I used to earn triple the income I have now. Everything was financed and I worked to pay the bills.

Clothes were on credit, gifts were on credit, a vehicle and a house were financed. I thought the job was there to stay and as long as I could make at least the minimum payments I would be OK. The only thing I never put on credit was groceries. At least I knew that was a bad thing to do.


Added to the debt was disorganization. Bills would be brought into the house and placed in a different spot each day and sometimes be paid late because of this.

Simple organization and refusal to fall into debt are all that's needed to pull a family out of a bad situation like this. Some people are quite happy to put everything into a computer program and make charts and graphs. Some have special apps on their cell phones to remind them when payments are due. Others track their net worth every day.


I don't carry a cell phone (one less bill, plus more freedom from distractions) and I like to keep things very simple.

I have one three-ring binder to keep me organized. If I complicate things too much, I know I won't keep up with it. Find what works for you and do it.


When mail comes into the house, it goes on the kitchen table. It took awhile to drill this in but it works now. Junk mail is shredded and recycled immediately. Bills are recorded on the calendar in the binder and placed in the pocket in the binder. I don't bother to buy a calendar anymore. Why pay between $10 and $20 when I can print one for free from the Web? I place it in the binder and use it daily. I haven't paid a late fee since I started this system.

Track your debt

At the bottom of the calendar on the right-hand side I keep a list of all the bills that come due monthly. This way if I don't get one in the mail I will remember it is due and call to find out what happened.


It is also nice to see these reduce in number as I pay them off. In January 2010 I had 14 bills and in December I had six -- only one of those was a credit card. The other five were regularly occurring expenses like rent and electricity.

At the bottom of the left-hand side of the calendar I keep a running total of the amount of my debt. During the past year I have watched it shrink several thousand dollars. It helps to keep you motivated to remain frugal and get rid of debt when you watch it shrink. This year I'm pretty sure I will get rid of debt completely and I can't wait!

I know that it makes sense and there are people out there who can automate their finances and have automatic withdrawals for savings and bill paying. I am on an extremely low income so this does not make sense for me. Sometimes I have $500 in my checking account and sometimes I have $5. This is how people end up with overdraft fees. If I look at my checkbook and send out the bills myself, I can avoid these problems.


Save little by little

Don't forget your savings. Having some money in savings protects you from having to resort to credit card use for unknown emergencies. When your car breaks down and you have enough to cover the mechanic's fees, it keeps that money from being added to your debt.


Debt repayment is important, but so is boosting your savings little by little. I always place in my account what I need for bills and keep cash for gas and groceries. I shop carefully through the week, and any cash left over when the next paycheck arrives goes into savings.

If I've bored you to death by now, please forgive me. I just want to let the unorganized, or the debt-laden, or the poor, or newly poor know that there is a way out. You aren't stuck here forever, and you can live a satisfying life on less money.


It may take more work, and a fresh look at consumerism, and thinking about what is really important to you. A little work and a fresh perspective can pull you out of the grasp of the debt monster.


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