How do you deal with a budget deficit?

by Rocket Finance

Earlier this week I shared that I use Excel for our family budget. In the spreadsheet I have set the formula in one particular cell to show our average monthly surplus or deficit as we move through the year. Since we are currently making a fairly large rent payment in our new location on top of the usual expenses associated with owning a home in our old location, we are running a monthly deficit. Once our house in the midwest sells, we are confident that our monthly budget will show a surplus.

Many financial advisers deal with deficit spending by simply saying that “you can’t spend more than you make” or “you must find a way to make your budget work”. However, while my new job came with an 18% raise, our rent, mortgage, HELOC, health insurance and car payment consume our entire monthly income.  A balanced budget is impossible for us right now. Mrs. Rocket does a great job in feeding, clothing, dealing with other life issues on about $350 a month at the moment – a pretty frugal amount for a family of five – yet that amount is still deficit spending. Gas and utilities further increase the shortfall each month.

So how are we staying financially solvent? Here are few ways:

  1. We are spending into our savings. This will cover the deficit for 8 to 12 months barring any unforeseen complications.
  2. Hustling. We look for deals, use coupons, and any other way to stretch a buck.
  3. The 2008 economic stimulus rebate will reduce our monthly deficit by 20 to 30% depending on the amount we receive.
  4. A cash back credit card. One to three percent cash back might not seem like much, but it adds up.
  5. A few bank bonuses. I don’t plan to open 20 accounts like I did a year ago, but we needed new accounts when we moved so Mrs. Rocket earned $125 from Chase and I took advantage of a $100 bonus from a local TCF Bank branch. We also registered each of our Chase debit cards for a $75 bonus if we spend $750 by June 15th. We have earned $100 of a possible $150 total. The Revolution Money Exchange bonus also added an aggregate $60 toward the cause. Ebates, ING and Virtual Bank have also helped.
  6. Side jobs. I hope to make an additional $2,000 to $5,000 this year by doing a number of odds and ends.
  7. Blogging has not really taken off for me yet. I am not considering going pro like Digerati, but Rocket Finance has helped to reduce our deficit somewhat.
  8. Gifts. Any birthday money that we receive this year is going toward our budget deficit.
  9. Reading personal finance blogs, of course!
  10. Prayer. We believe that God is interested in our family and in our financial situation. He has promised that he will meet our needs. We don’t necessarily know how the needs will be met, but we can live and rest with the confidence that He has promised to set our path straight.

There are other more drastic ways to deal with a deficit – find a new job, move again or become homeless, but right new we are trying to make our current situation work. We are happy and looking forward to seeing how this story unfolds.

How do you deal with a budget deficit?

Or maybe you have never had one. . .

  1. 9 Responses to “How do you deal with a budget deficit?”

  2. By plonkee on May 2, 2008 | Reply

    This is where having an emergency fund is helpful. It’s a good job that you didn’t wait to discover sensible personal finance until now.
    Hopefully, your house in the mid-west will sell quickly and then you’ll be back into normalcy.

  3. By rocketc on May 2, 2008 | Reply

    You and me both!

  4. By Elizabeth on May 3, 2008 | Reply

    We are in a similar situation to you!!! We thankfully have only “overspent” once by $100, but we have already used up our savings paying for our house in the Midwest, waiting for it to sell… however, we have other resources coming our way in the near future, and have also benefitted from renting from my dad who is allowing us to pay less rent at the moment.

    Once we sell our home we would shift to having a “surplus” and then we will start to save again.

  5. By The Digerati Life on May 3, 2008 | Reply

    I like your list! Since switching to blogging as a main income, I have also needed quite a bit of prayer to help tide us over the gaps… 🙂 My main strategies:
    1. cut down on costs a lot
    2. find side jobs, freelance projects and work on my blog for the income
    3. have faith/pray that the hard work will pay off and I won’t have to go back to a real job in the future… 😉

  6. By rocketc on May 3, 2008 | Reply

    Elizabeth: please keep me updated on your situation. We might also start renting our our home . . . hopefully this doesn’t impede our ability to sell it.

    Silicon blogger: thanks for stopping by! My wife enjoys your grocery posts – she just showed me a receipt where she saved 50%!

  7. By Elizabeth on May 4, 2008 | Reply

    We have someone interested in renting, but at this point we are just hoping to sell it, cut our losses and be done with it. Our community doesn’t allow for long-term rentals anyway. I’m hoping that as the rebate checks come maybe people will be inspired to buy… our townhouse is VERY low cost (less than 65K) and the main problem is that we have “competition” who have remodeled their homes… and we haven’t. But in our favor the location is excellent.

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