Use A Personal Budget To Get Out Of Debt
April 24th, 2015
When you are in debt, it can sometimes seem like it is impossible to get out of it. You owe so much money, and with interest charges, you just can’t seem to make any headway on the principal loan. Try as you might, the debt just lingers and becomes a burden you need to carry around everyday. While there are no quick fixes to get yourself out of debt, besides winning the lottery, there are some things that you can do to try and get ahead of it. One of those things is to create a personal budget. Having your money well organized will help you to pay off more of your debt and faster.
Here’s how you get started. First, either grab a pen and paper, or open up a new document on your computer. You are going to want to write down everything single thing you spend money on in a month, so make sure that whatever you use, you have plenty of room. Try and order the items from the most important to the least important. Things that would be considered important would be your electric bill and credit card payments. Less important things would be like your morning cup of coffee, or going to see a film. Once you have every single thing written down, add them all up. This is your standard expense for a month. On the other side of the page, write down what you earn in a month. If your income is lower than your expense, you have a problem.
Whether or not your income is higher or lower however, you are going to want to start cutting back. Look at those things on the bottom of your list, and see how many of them you can either reduce or cut out entirely. Even if it is a hard decision, you are going to need to cut out as much as you can. The lower that you can get that number, the better that this will work. Once you have gotten rid of everything that you can, add up those numbers. If your income was lower than your expense, subtract that difference from this amount so that the only number you have left is the extra money you will have at the end of a month.
Now you are going to want to take that extra money you just found and put it towards your debts. If you have several different debts, get out another sheet of paper and write all of those down, ordering them from the ones with the highest interest rates to the lowest. Calculate how much the minimum payment would be for all of your debts. Make sure you have enough to pay that minimum, and anything that you have left over should be used to pay off the debts at the top of your list.
With your budget set up, it is just a matter of sticking to it. Complete this process each month, always penciling in your debt payments to ensure that you have enough. Every extra dollar that you save should be put towards those debts with the highest interest amounts. Even if it is just a little bit, the more you can pay off, the quicker it will go and the more money you will save in the long run. It may feel like a slow process, but if you can stick with it, before long you will start to see progress. The important thing to do is keep up with your budget, as it will help you to make sure that your debts are always a priority, and that you always have money to pay for them. If you can do this, you should have no trouble paying off your debts in time. Good luck!