Getting Out of Debt with a Budget
Getting out of debt does not need to be as stressful as you are making it. One of the best ways of getting out of debt is through the use of a budget, which is something that you can do without the need for paying out excess amounts of money for software or financial advisors.
There are actually a number of websites that will offer free advice for getting out of debt and you can make your own spreadsheet to start your budget. All you need is some time, all of your finances and the ability to be honest with your spending and the motivation to get yourself out of the debt that you have gotten yourself into.
The first thing that you will need to do is sit down with your partner and work out the amount of money that you have coming in each month. For the first month of your budget, simply do the figures and see what your spending is like rather than setting a strict budget. Input the amount of money that you have coming in each month and then look at the money that you need to pay out each month.
Do not include your debts yet; the outgoings will be your basic bills, rent or mortgage payments and any direct debits that you have. You should also include your grocery bills at this point. Now you will have the money left over for your debts. This will be the time to work out what debts you have and how much you need to pay each month – such as minimum payments.
Before you start saving any money that you have left, work out how much can go on each of your debts. Consider the lowest amount of debt that you have first, especially if is a credit card. By getting your credit card down to 30 percent of the balance, you can improve your credit rating ten-fold. Also, by working on your smaller limits, you will start to see the light at the end of the tunnel.
Getting out of debt is possible and it does not need to be stressful. However, you may struggle if you find that you have no money left over once you have looked at your outgoings. At times like this, you will have two options; either increase your monthly income or cut down on your spending. There are a variety of ways that you can increase the amount of money coming in, such as selling old items that you no longer use or to take online surveys that pay. You can also cut down on the amount you spend on food or clothes per month. Remember that this is not going to be forever and the sooner you get out of debt, the sooner you can go back to spending the money on what you want.
Once you are out of debt, do not get yourself back into it by using your credit cards again. Stop spending on them or only use them when you know that you can pay for it from your paycheck. Continually using your credit cards sensibly can actually help your credit rating.