Jun 252012

Debt is a hard thing to get out of on its own, but it’s even harder if you don’t have a game plan.  One of the best things you can do is to create a budget; in fact, you have to start with creating a budget.  You need to know where you’re money is going and what you have left over to work with.  Don’t think that you can just do this for one month and you’ll be good to go.  We all know that expenses can change from month-to-month.

It isn’t hard to create a budget.  First, get yourself a piece of paper.  Make two columns – one side for all your income and where it comes from, and on the other side, list all the accounts with debt and the required monthly payment along side of that.  Now add up the required monthly payments and deduct that amount from your income.  What’s left over is the amount that you have left to play with for the month.  Figure out what you might need to allocate towards unexpected expenses.  That figure needs to be set aside as an expense so that the money will be there when you need it.

To stay on budget – write down all the expenses you incur during the month.  One way I keep track of this is by using a checkbook register.  I list what I started out with for money and then every dime I spend, I list in the register.  This shows me exactly what I have done with my money and where I could possibly cut back.

If you have extra money and can pay more towards a creditor that has a high interest rate – do so.  Paying down high interest balances is to your favor – saving you a lot of money.  Sometimes it makes sense to consolidate all debt and make just one monthly payment.  If you go that route, cut up your credit cards so that you don’t go spending beyond your means again – keeping the one with the lowest interest rate in the event you need it for an emergency.

There is a light at the end of the tunnel and once you’re free of all that debt – you’ll feel so good and be so proud of yourself.

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