It is not a great feeling to check your bank account online and see red text, meaning you’re in negative territory. Years ago I had a negative bank account, so I know firsthand how stressful it can be. In this post I will tell you how I turned things around into positive numbers.
Years ago my bank account went into the red. I had just moved. I was dealing with a significant break-up. My business was going through a change, several cafes and stores that were regular good customers closed down within months of each other so we were selling less. I needed to make some tough decisions. There was obviously a lot going on in my life at that time.
As someone who has always tended towards being frugal, and is more comfortable with saving than spending, seeing my bank account go into red territory had me stressed. I lived in a city where I did not have family and I knew I needed to do something myself to fix this situation.
I took many steps to get my negative bank account back into positive territory again. In this article I will share some of these ideas to help you if you find yourself in a similar financial situation. I used these tips for a small to moderate level of debt. But they would still be useful as part of a plan to tackle larger amounts of debt. Some of these steps were temporary changes I made in order to help stop the debt. Others were permanent, like selling items. It wasn’t just one step that helped; it was the combination of trying a lot of things. I wanted to put these strategies in place quickly before my debt got more out of control.
Here are some of the steps I took to fix my negative bank account:
Sell items you own
I sold items from around my home to quickly make money. I sold shelves, furniture, kitchen ware, a table, and other items. This was a step I was able to take right away to make money to pay bills. This was quite painless as I did not have to sell things I was super attached to. I was able to declutter while at the same time making money. Most people (I know not all) will have extra items around their home that they would absolutely not miss. Read my post above to get lots of tips and concrete ideas on what to sell and where to sell.
Set up a line of credit
I set up a bank line of credit. I used this only until I was back into comfortable territory again. The interest rate I believe was around 3% which was incredibly low, especially compared to the 20% rate on my credit card and on many credit cards. I used this line of credit for a couple of main things. I would use it to pay bills that were essential for the month. Also if I did not have enough money in my account in a particular month to pay off my credit card in full I would use the line of credit to pay my credit card in full. Money would still be lost to interest but at a much more manageable rate so it wouldn’t snowball my debt.
I closed the line of credit a couple of years after my bank account went back into black. I probably could have closed it earlier, but I kept it around for a bit after I was in a better place financially. It gave me peace of mind knowing it was there until I got my financial confidence back.
Make temporary difficult choices
In this case for me as a small business owner, I had to let go of a couple of part-time employees. It was a hard decision but I just couldn’t afford them at that time. I had to work extra hours to get our orders completed but this saved money that I just didn’t have at the time. I couldn’t keep paying people while I was going into debt. Luckily the employees were not relying on this job for their livelihood which definitely helped make the change easier. When business increased again (with some hustling on my part!) I was able to hire part-time help again.
At the time, I didn’t know anything about blogging or that people could make money by blogging. So I did it the old-fashioned way and I looked for a part-time job. There are many part-time jobs that are possible to get fairly quickly. These include jobs in coffee shops, restaurants, and call centers/help desks. Also many clothing stores in malls will increase the number of people they hire around holidays. If you were looking for a quick new part-time job around the winter holidays, you would probably have a faster time getting hired.
Send your resume out to lots and lots of places to increase your chances of getting hired quickly. Will you get rich with any of these jobs? Probably not. But the extra income will absolutely help the temporary negative status of your bank account. I did end up getting hired for a part-time job fairly quickly. I was able to work part-time and also keep my business going until I could increase it again and hire employees again.
Let go of pride
After talking about adding in a part-time job, I have a special note about pride. There might be jobs that you could apply to that are beneath your usual pay grade. That you are over-educated, over-trained, way over-qualified for. When I was looking for extra work quickly, I had to let my ego take a back seat.
If you are looking for something quickly, relax your standards a little. Will this be easy? Maybe for some people, it wasn’t for me. I had to grow into my decision. But the concern of growing debt fueled me to take action quickly. I know debt spirals can be very hard to escape from and I wanted to fix things fast if possible. I made a deal with myself that whatever job I took could be temporary to help curb the growing money issues. When things were financially more stable, I could plan longer term with something that interested me more.
I sold jewelry. Although I do like jewelry, I am not a person who wears much jewelry if any. I think I like the idea of wearing it or how it looks more than how the earrings or necklaces or bracelets feel on me. What can I say, I like to feel unencumbered. I also like to be fairly active and it’s nice to not have to be taking jewelry on and off or worry about forgetting it somewhere. So I went through my jewelry collection and sorted it into two piles – real grown-up jewelry (aka pieces that might be worth something) and costume jewelry. I ended up selling gold jewelry and silver.
What I learned was that you don’t have to have the largest diamond or chunk of gold to make it worth something. Especially if you have several pieces to sell, your cash back can add up. I had a whole bunch of plain gold chains sitting in a jewelry box and I never wore them. It really didn’t even occur to me that these might be worth something, but they are still gold! I made some good money quickly by selling several of these chains.
You have to use your judgement here to determine what you would be comfortable selling and what you would miss. I would absolutely not recommend selling your great grandmother’s heirloom gold ring that you adore so that you can make some quick cash. This could end up being a big regret. Pick another way to help your debt situation; there are many others in this list! But if you have pieces you have no attachment to and never wear, they might be a good candidate to sell.
Temporarily cut back on non-essentials
I cut way down on my little luxuries. We all have them, those splurges that we don’t really think of as splurges because they are not big dollar amounts. But the little things that we spend money on regularly will absolutely add up over time. When your bank account is hurting, it can be very helpful to look at these things that we might think we “need” but actually we just “want”.
For me, this was expensive coffee shop drinks. This was my weakness. I knew I was spending a lot on this category but I really didn’t want to cut back. I felt like I deserved this little treat if I worked a long day, and I justified it by telling myself that it was only $5. At the end of the week I could end up easily spending $25 on just basically caffeine and milk. That is $100 per month that I could put towards debt reduction. I temporarily brought drinks from home, which really wasn’t so horrible. I did increase my spending on this again once I got my finances back in a better place. We all have those little things that make us happy and this is one of mine.
Maybe your little luxuries aren’t lattes and mochas. They could be:
- Getting manicures or pedicures
- Getting your hair done (cut, colored) at a salon
- Take-out food
- Buying magazines
- Buying another lipstick when you already have 20 (guilty! I have way too many Burt’s Bees!)
- iTunes downloads
Again these are not big expenses, but they do add up. If you can even temporarily find a way to reduce them or cut them out completely, it will help a lot towards getting your bank account healthy again. Can you read magazines online or take them out from the library? What about dyeing or cutting your hair at home for now? Can you stop buying new lipsticks and use the ones you have? (note to me!) Make more meals at home instead of ordering take-out? If you don’t have time for that right now (hello temporary extra part-time job!) you could pop a frozen pizza in the oven on a Friday instead of ordering take-out pizza.
Figure out what works for you and start there
All of these steps took time and effort. Some steps were simpler and faster to implement, like cutting down on little luxuries, and selling some items from around my home. Others took more time such as finding a part-time job or researching how best to sell jewelry to make the most money. It might be harder for some people to part with selling things they own, or cutting down on treats they love but I personally did not find that part painful. I am very motivated by the fear of debt. I also had extra determination because I didn’t have family where I lived at the time to fall back on.
It took time to get my negative bank account balance to positive
It took about six months to a year for me to put all these changes in place and get back to a more comfortable place financially. When I could finally check my account online and not see a negative bank account balance, it was the best feeling! It is a real confidence booster to be able to turn things around from red to black. Since that time, I use some of these same tips and strategies when I would like to save more money or plan for a trip. Some of these very challenging times in our lives can give us skills that will be so useful for the future. This is one time that I found out I can really hustle if I need to! I know you have the hustle in you too. It is so worth the peace of mind that a healthy bank account can bring.
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I want to hear from you: what are some things you did to get out of debt quickly or rescue yourself from impending debt?