Juggling bills on a tight budget

John and Annette Graves meet with financial counselor Joshua Huffman at The Village Family Service Center. Dave Wallis / The Forum

This is the second in a series of stories following three families through a Financial Fix-up. It appeared in The Forum Jan. 5, 2011. 

John and Annette Graves have been robbing Peter to pay Paul. The Moorhead couple, one of three families participating in The Forum’s Financial Fix-Up, knew their monthly budget was short. Each month, Annette would shuffle bills to make sure they didn’t fall too far behind on any payment. But it was still emotional to see the numbers during their financial counseling session with The Village Family Service Center in Fargo. 

“Cutting the expenses when the budget is that tight is, at least for me, very humbling. You find yourself where you don’t necessarily want to be,” she said, tearing up. 

After putting together an estimate of monthly income and expenses, the Graveses’ financial counselor, Joshua Huffman, found they were short about $300 a month. The couple bring home an average of $3,300 a month. It’s a figure that varies wildly because John is self-employed, doing siding, windows and other outdoor projects. They calculated their monthly expenses at $3,600, a figure Huffman said was frugal for a family of five. 

One thing working in their favor was a relatively low debt level, composed of a mortgage, personal and student loans, a vehicle loan and about $2,800 on a few credit cards. But in some ways, this makes their situation more difficult. In cases where the couple have a lot of unsecured credit card debt, that’s often the first bill Huffman will suggest forgoing when ends don’t meet. The consequences are less severe than missing a house or car payment, and the collection process is lengthier, he said.    

Huffman’s first task for the Graveses was to track their spending (Here’s a sample tracking worksheet. Print a blank tracking worksheet here). This will show how accurate their budget was. “It’s really hard to make changes in your situation if you don’t know where the money is going,” he said. Next, he told them to prioritize their expenses. Things like housing, transportation, food and utilities should come first, Huffman said. At their December counseling session, the Graveses owed a pickup payment with another one due soon, and still needed to pay the mortgage. “You need to take care of yourself first,” he said. 

He told the Graveses to talk about what different spending cuts they could make, acknowledging there’s not a lot of fluff in their budget. Annette had already gotten a student loan deferred. They’d cut the cable package, reduced their car insurance and cut back on eating out. She shops thrift stores and garage sales, and trades kids’ clothing among a circle of friends. She was applying for heating assistance.  

Their best bet will be to increase their income, Huffman said. “Your budget rises and falls based on when that income comes in,” he said. The Graveses agreed. The day of their session at The Village, John had an interview for a full-time position, which would provide a steady paycheck.  

Huffman said if they can get to a point where the budget would balance going forward, they could be eligible for a hardship grant from the Otto Bremer Foundation, administered by The Village. The money would go toward getting them caught up on their past-due bills, which was their primary goal when applying for the Financial Fix-Up project.    

Huffman said even with a $300 deficit, Huffman said their budget was “fairly balanced.” “It’s not uncorrectable,” he said.  

Readers can reach Forum reporter Sherri Richards at (701) 241-5556   

Understanding a financial counseling session 
When clients meet with a financial counselor at The Village Family Service Center in Fargo, the first thing the counselor gathers is a comprehensive list of fixed, variable and periodic expenses. 

Fixed expenses are the same each month, such as the rent or mortgage payment and debt payments. “Usually they’re the first bills you pay when you get paid,” said Joshua Huffman, financial counselor. Variable expenses are things like groceries, toiletries, utilities and gas for the vehicle. They may vary month-to-month, but are always there. Periodic expenses, like home maintenance, car repairs, medical expenses, travel and gifts, don’t come up every month but can be budget busters if not planned for. 

Each category is tallied. The amount that should be set aside each month for those periodic expenses is calculated, as well as how much a couple is short or has left each month. From there, the counselor provides a customized financial action plan, usually advising them to track their expenses, and then cut spending and/or increase their income. “When it comes to dealing with problems with money, there really is no magic wand and no easy answer. Usually it’s a lot of sacrifices and hard decisions in figuring out what changes you can make,” Huffman said.