The Importance of a Budget - Avoid Bankruptcy
One of the most important skills to use to get out of debt, stay out of debt and avoid bankruptcy is by using a budget.
Budgets are often seen as a bore and a chore, but the importance of a budget cannot be overestimated.
One of the main reasons for getting into debt is uninhibited spending.
Budgeting will help to reduce the temptation to spend needlessly as it focuses you on what is important, what is needed and what actions you must take to erase your debt.
It makes you think twice about buying something because you want it...
but you don't actually need it.
When you do a budget you need to collect all of your financial information and record this on paper or on a spreadsheet.
As it includes all of your income and all of your expenses it creates a snapshot of where you are financially.
This can be scary and probably the main reason that budgeting has a bad rap...
not because it is boring but because it is frightening.
Frightening to know how much debt you have accumulated...
and with not enough income to pay it off.
A budget will show you where you can make changes and where you MUST make changes.
It does not mean that you cannot have any fun but it does mean that you will need to adjust your lifestyle if you want to avoid bankruptcy.
Your budget allows you to consider what extra funds you need coming into the household to cover your essential expenses and your debts.
One thing you must never do is avoid making a loan payment.
You must pay at least the minimum to ensure that your credit history remains intact.
If you have missed payments and got behind you will need to contact your lenders and negotiate with them.
If they can see that you are making an effort to put things right they are more likely to work with you.
Having completed a budget that you can present to them will show your willingness to make an effort to pay off your debt and change your habits.
Your budget should be reviewed regularly to make sure that you are on track and see where you need to make changes.
The importance of a budget can be seen when organizing your finances and getting that snapshot of where you are financially.
It will help you to understand where you need to be, and how you can plan to get there - your goal to be debt free and avoid bankruptcy!
Budgets are often seen as a bore and a chore, but the importance of a budget cannot be overestimated.
One of the main reasons for getting into debt is uninhibited spending.
Budgeting will help to reduce the temptation to spend needlessly as it focuses you on what is important, what is needed and what actions you must take to erase your debt.
It makes you think twice about buying something because you want it...
but you don't actually need it.
When you do a budget you need to collect all of your financial information and record this on paper or on a spreadsheet.
As it includes all of your income and all of your expenses it creates a snapshot of where you are financially.
This can be scary and probably the main reason that budgeting has a bad rap...
not because it is boring but because it is frightening.
Frightening to know how much debt you have accumulated...
and with not enough income to pay it off.
A budget will show you where you can make changes and where you MUST make changes.
It does not mean that you cannot have any fun but it does mean that you will need to adjust your lifestyle if you want to avoid bankruptcy.
Your budget allows you to consider what extra funds you need coming into the household to cover your essential expenses and your debts.
One thing you must never do is avoid making a loan payment.
You must pay at least the minimum to ensure that your credit history remains intact.
If you have missed payments and got behind you will need to contact your lenders and negotiate with them.
If they can see that you are making an effort to put things right they are more likely to work with you.
Having completed a budget that you can present to them will show your willingness to make an effort to pay off your debt and change your habits.
Your budget should be reviewed regularly to make sure that you are on track and see where you need to make changes.
The importance of a budget can be seen when organizing your finances and getting that snapshot of where you are financially.
It will help you to understand where you need to be, and how you can plan to get there - your goal to be debt free and avoid bankruptcy!
Source...