Budgeting your money and bills can be one of the most difficult things to do in life. It requires discipline and hard work, which is difficult to maintain. There are many things that can be done to turn your finances around and give you piece of mind.
To start budgeting, you must first write down all of the debt you have and your monthly payments. You will also have to note your take home pay to base your budget on. This has to be the amount that you will always get during a pay period or the lowest amount you will receive. I prefer to use the computer and an excel program to setup my budget.
When you setup your spreadsheet, you will have many different categories and list each creditor and the amount you owe monthly and total amount. An example:
Loans Monthly Payment Total Owed
Home Mortgage Company $1000 $150000
This format will allow you to separate the type of debt you have and organize your expenses. Some of the categories that I use are: Home, car, insurance, loans, utilities, credit cards, medical, groceries, and misc. (Gas and car maintenance, etc). You must include everything to make sure your budget is accurate.
When you get all of the expenses listed with the minimum amount owed, you must now compare it to the actual income you make in a month. This will tell you if you need to make any cuts in any expenses. This can be difficult and maybe change how you live sometimes, but it will help in the long run. If you have more income than bills, then you have some options.
Budgeting is a great tool to get out of debt, but paying the minimum amount on credit cards and any interest bearing expenses will never help. For instance, a credit card with a 20 percent interest rate will cost you thousands of dollars and many years before you pay off the card. Starting with one card is the best way to go in this situation. Take the highest interest account you owe and work on that one first. Paying extra will help pay it off quicker and allow you to concentrate on the next highest account.
Another problem is living beyond your means. If your budget comes up negative and you owe more money then you make, then changes must be made. If you can eliminate expenses that are luxury items, then you may have to do that. You may want to consolidate your accounts to a lower payment, but that has drawbacks too. By consolidating your credit cards to a loan, you are making unsecured debt secured debt. This is an option, but do not do it unless you have no more choices.
Getting out of debt can be very difficult and stressful, but when you have everything under control it is worth it. The best option is to only use cash and just have credit cards for emergency purposes, but that is not realistic in this economy. You just have to be responsible for your actions and be disciplined to succeed in budgeting. You can do it.