The reason you’re in debt may be hiding in plain sight

More Americans appear to be spending beyond their means. And as one Reddit user discovered, living that way for too long can make it difficult to get back on track.

The Redditor, who goes by vitreous_luster, posted to the personal finance subreddit seeking help creating a budget for the first time. After working through his costs, he discovered that he was roughly $700 in the hole every month, with monthly expenses adding up to $2,100 and a monthly income of just $1,430.

“I lost my full time job this past April and I’m now working part time at a bank while also attending college during the day,” he wrote. “I’m overwhelmed by all of this. I’d like to start digging myself out of this hole but I have no idea where to start.”

He spends almost as much on transportation as rent

Like the average American, the Reddit user spends roughly a third of his income on housing. And he actually appears to spend less a certain things, such as eating out and health care, based on data from the Bureau of Labor Statistics.

But some of his expenses are clearly out of whack, particularly when compared with average consumer spending. For starters, the Redditor spends nearly as much each month on transportation-related costs — roughly $585, including auto loan payments, car insurance, gas, tolls and other car-related expenses — as he does on rent ($600).

While transportation adds up to the second-biggest expense for the average American consumer, most Americans spend half of what they do on housing on transportation.

Commenters picked up on this. “You need to sell the car,” one user responded. “If you are in a place where a car is required, move…Ideally, all in with gas, insurance, etc., you’d want to be spending less than $200 on a car, and given the gas and insurance costs given, that does not seem within the realm of possibility.”

Other Reddit users suggested looking at ways to reduce the car-related costs, such as getting cheaper car insurance by bundling it with renter’s insurance or always making an effort to find the cheapest gas possible. One commenter even suggested researching companies that pay drivers to attach ads to personal vehicles as a way of offsetting the car-related costs.

Additionally, many commenters took note of how much money vitreous_luster said he was spending on groceries. While the average American only devotes 7% of his total spending to food at home, the Reddit user said that nearly a fifth of his monthly costs were groceries.

Always negotiate and compare prices

One of the clear lessons from how much the Reddit user spends each month is that spending money without researching is a recipe for financial disaster and, sometimes, the reason why you’re in the red is hiding in plain sight.

For starters, vitreuous_luster purchased a 2012 Volkswagen Jetta for $13,000 last year. “My current car was dying, I had $0 savings, and I needed a reliable car ASAP. I realize it isn’t ideal, and my financial situation was better when I bought the car,” the user wrote.

Other users noted that the price appeared high for that make and model. Moreover, data shows that buying an older car for less money could have been more advantageous in the long run.

What’s worse, the Reddit user noted that he was in a bind because he now owes more on the loan ($11,000) than the car is worth ($8,000). Without savings, there’s no good way for him to get out of that situation.

His best bet: Negotiating with his auto lender. Research has shown that most people overpay when it comes to auto loans, and the lender could be open to modifying the loan to make it more affordable for the Redditor.

Similarly, the Reddit user noted that he isn’t discerning when it comes to grocery shopping: “I don’t eat out very often but I do cook a lot and I literally never check prices when I’m grocery shopping, I just get what I need for the recipe.”

Commenters suggested various approaches to lower that cost — from shopping what’s on sale and basing meals around that to buying food from low-cost chains like Aldi or warehouse clubs like Costco COST, +0.24%

Other grocery shopping hacks can save consumers serious money, including only buying in-season or frozen produce, asking the butcher to process a larger cut of meat for you or even just going through the store in a clockwise motion.

Stay humble and consider side hustles

Another option: Consider going to a food bank. “There is no shame in this, but remember to pass it on when you are in a more fortunate situation,” suggested Monica Dwyer, a certified financial planner with Harvest Financial Advisors in West Chester, Ohio.

While commenters on Reddit focused on ways vitreous_luster could reduce his spending, financial advisers suggested that the spending wasn’t the problem so much as the lack of income.

“I believe the big issue is that his top line decreased substantially, he went from full time to part time work and he has limited expenses that could be cut,” said Lorenzo Sanchez, a financial planner with Rowling & Associates in San Diego. “This leads me to believe that he will be fine once he goes back to full-time work, which he will eventually, and that his struggle is temporary.”

In the meantime, Sanchez and other advisers suggested that the Reddit user explore other part-time gigs through services such as Uber, Door Dash or Wag. “He has two assets he could put to work, his time and his car,” Sanchez said.

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