Broke? 5 ways to turn your finances around

3. Slash expenses

Sometimes you need to take a meat cleaver to your expenses, as new Women in Red member Jane has discovered.

A single mom who has been supporting her two sons, now in college, with a series of low-wage jobs, Jane earns just under $1,900 a month -- and has been facing a $1,300-a-month shortfall since May, when her child-support payments ended.

What has put her finances on an upward trajectory for the first time in years: She and her boyfriend have agreed to become roommates and to split expenses. That will save her about $1,000 a month.

Meanwhile, she's determined to cut her grocery bill, cable bill, cell-phone bill -- and get a part-time job to cover the rest of that gap. "I know what I have to do, and I'm prepared to do it," Jane says.

4. Save, save, save

Few people recognize that saving doesn't just mean having an account. It's a habit you have to teach yourself, starting with dimes, nickels and quarters, if that's all that's possible.

The routine of saving is more important than the amount saved. This saving is separate from retirement. It's the financial cushion that helps you keep an even keel.

Tricia has knocked her debt down significantly, not just by making those regular payments but by salting away $10 a week into a savings account to cover unexpected expenses.

Heather, 24, our newest Women in Red member, is living on her husband's income of about $2,100 a month while she's in law school. But she has built up $1,050 in an emergency fund so that if a crisis occurs, they don't have to use their credit cards.

"Even though we don't have much money, I know we'd be in worse shape if we didn't put something regularly into savings," Heather says. And she's right.

5. Be brave

Above all, what many of the Women in Red learn as they change their financial lives is that it's a "no guts, no glory" scenario.

Does it take time (and sometimes feeling like a fool) to read and learn and ask basic questions in order to find the answers you need? Yes.

• Talk back: What tactics work when you're really broke?

Is it painful to examine your past mistakes and be humble enough to learn from them? You bet.

Is it tough to reorganize your priorities so you can live on what you make? Of course.

These steps are hard for everyone, but they can feel nearly impossible when you have so little money to start with, when you're behind on the bills, and no matter how hard you yank those two ends they never seem to meet.

That's when a new level of personal courage and determination is required. By giving up her apartment and moving into a shared house, Kimber slashed her rent by more than half.

That wasn't easy -- and she added about 30 minutes onto her commute each way -- but she also put herself on more secure financial ground, as I did when my family and I moved out of New York City to a low-cost rural area.

The courage to try a new way

I'm not such a Pollyanna that I believe there is a prescription that will get everyone out of the economic straits they're in. Age, race, disabilities and other circumstances are among the countless factors in life that conspire to overwhelm people.

I only hope that by their example, the Women in Red might inspire people to consider whether they too can make more of the options they have. Our motto -- "Taking Total Financial Control" -- may not be possible for everyone.

But most people can take some control. And that's what gets you on a different path.

Published Nov. 14, 2007

READ MORE: BUDGETING - FINANCIAL PLANNING - WORKING POOR - SAVING

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