A Plan to Get Out of Debt - The First Step is a Budget
You need a plan to get out of debt.
The first step is a budget.
No wait, before you go ballistic.
It might seem like a no-brainer but the fact is many people in your situation have no clue as to their finances - where their money comes from and how much as well as where their money goes.
That is why this article argues that putting together a realistic budget is the first step to making a plan to get out of debt.
Here is why.
You have to have a clear picture of where you have been before you can map out a way to go.
This is especially true in straightening out your finances.
There are some bills you have which very little can be done about such as utility bills, house rent or mortgage, and your child's education.
Thus, you need to identify those bills and put them in your budget as bedrock expenses.
Then you need to specify what income you have.
Here, you want to be clear and concise and give an accurate picture of your income as it is and not as you hope it to be or wish it was.
Then list your other monthly expenses which are necessary but over which you have some control like groceries, travel, clothes, entertainment, etc.
Now, you want to look at your income and your expenses and see if there is anyway you can reduce them.
For instance, you might reduce your utilities by watering the grass less often and making sure lights are turned off when not in use as well as unplugging your television set, water cooler, and computer at nights.
You should now subtract your expenses from your income.
But wait, this is not money you can play with just yet.
If you do not have money left, then you should talk to a bankruptcy lawyer or financial counselor because you are in serious financial difficulty.
Deduct 10% (although a higher figure is preferred) for savings and emergencies and force yourself to do this each month even if it hurts.
Your net available funds is what you have to work with to get you out of debt.
At this point you want to total up your monthly payments on your debt and if they exceed your net available cash then you will want to talk to a debt counselor or other professional about a consolidation plan or some other way of handling your debt.
The first step is a budget.
No wait, before you go ballistic.
It might seem like a no-brainer but the fact is many people in your situation have no clue as to their finances - where their money comes from and how much as well as where their money goes.
That is why this article argues that putting together a realistic budget is the first step to making a plan to get out of debt.
Here is why.
You have to have a clear picture of where you have been before you can map out a way to go.
This is especially true in straightening out your finances.
There are some bills you have which very little can be done about such as utility bills, house rent or mortgage, and your child's education.
Thus, you need to identify those bills and put them in your budget as bedrock expenses.
Then you need to specify what income you have.
Here, you want to be clear and concise and give an accurate picture of your income as it is and not as you hope it to be or wish it was.
Then list your other monthly expenses which are necessary but over which you have some control like groceries, travel, clothes, entertainment, etc.
Now, you want to look at your income and your expenses and see if there is anyway you can reduce them.
For instance, you might reduce your utilities by watering the grass less often and making sure lights are turned off when not in use as well as unplugging your television set, water cooler, and computer at nights.
You should now subtract your expenses from your income.
But wait, this is not money you can play with just yet.
If you do not have money left, then you should talk to a bankruptcy lawyer or financial counselor because you are in serious financial difficulty.
Deduct 10% (although a higher figure is preferred) for savings and emergencies and force yourself to do this each month even if it hurts.
Your net available funds is what you have to work with to get you out of debt.
At this point you want to total up your monthly payments on your debt and if they exceed your net available cash then you will want to talk to a debt counselor or other professional about a consolidation plan or some other way of handling your debt.
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