| PFPlanning.com
Budget your expenses and leave debt behind in 2011
Credit card debt spiraling out of control is a
phenomenon faced by families across the globe. While people are
recovering from the after-effects of the global recession and reducing
their monthly spending to pay off their financial obligations, they
believe that they have taken a big step towards their credit card debt
problems.
Still, many households are drowning in debt and are
wondering whether to seek help from debt settlement companies. Though
debt settlement is a viable option for debtors, budgets are always a
better deal when it comes to handling personal finances.
Forget the coupon clipping and help from the debt
relief companies and their steep fees. A realistic and straightforward
budget is a much better way to get on top of your debts. You need to
master the arts of cost cutting and reining in expenses. Here’s how you
can leave debt behind and set up a monthly budget worksheet to keep a
track on your finances:
1. Determine your gross monthly income: The
first step towards seeking financial freedom through budgeting is to
know your gross monthly income. If you're a salaried employee, it is
most likely that your income will remain the same every month.
Self-employed and commission based income may prove to be more
challenging to derive. You may look back on what you earned for the past
6 months and determine your average income. If the amount fluctuates
with time, use the lowest figure for the purpose of budgeting.
2. Make a list of all your expenditures: Do you
have any idea of where you spend your money every month? Well, most of
us don’t. Keeping a track on your monthly expenses is crucial for you to
monitor your savings rate per month. Write down every penny spent on
every small item. All this could include your insurance payment, monthly
mortgage payment, utility bills, credit card bills, clothes, groceries
and many more.
3. Develop a budget worksheet: A well-maintained
system is a prerequisite when it comes to making your budget. If you’re
computer literate, the best way is by doing this through a budget
worksheet, but if you aren’t you can use pencil and paper for your
convenience. Categorize your expenses and write down everything in order
to be able to calculate where you stand at the end of the month.
4. Total your expenses: Take total expenses and
subtract them from your income to see how much money you actually end up
saving each month. A negative number implies that your expenses exceed
your monthly income or that you’re living way beyond your means. This
will also imply that you have some work to do on your personal finances
so that you can restore the balance.
5. Cut spending drastically: If you’re in
negative territory you need to take a close look and check where you can
cut spending. Simply eliminate all unnecessary costs like eating out,
using multiple cell phones etc. After reducing all such costs, if you’re
still in negative, look for ways to boost your income.
Though a budget can be the best approach, this
doesn’t mean that you’ll give up on coupon clipping and bargain hunting.
Try to make all these money-saving tools support your financial plan. As
you see more financial success with your budgeting efforts, don’t get
tempted to move away from your budget. Stick to it and focus on it so
that you can stay away from getting help from debt settlement companies
and get back a grip on your finances by protecting your credit score.
Submitted by DebtConsolidationCare
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