How To Budget With Debt
Lets face it, trying to create a sensible budget while managing your debt can be a difficult thing, especially when you feel as though you’re in way over your head.
What’s even more difficult is the budgeting aspect. Creating a daily or weekly budget for yourself might feel next to impossible if you’ve got a ton of debt to pay with little money for living expenses.
But there’s hope…
If you create a sensible, organized budget and stick to its restraints on a regular basis, you might find that you can control your debt more easily. Creating such a budget is very simple and can be done quite easily.
The Steps To A Balanced Budget
Creating a sensible budget for yourself starts with determining your financial goals. Are you looking to pay down your debt? You might want to sculpt your budget around that goal, perhaps by tackling one item of debt at a time. Take a look at your mortgage, car payments, loans and credit cards and figure out which of them is the top priority. Then, focus on that that item and work in a good portion of your budget to getting that taken care of.
If a goal for you is to save, then budget a certain amount of money aside each paycheck towards a savings account. Savings can be for anything from having children to creating an emergency fund or healthcare fund for your family.
The next step is to calculate your finances and get a firm grasp on your expenses. Take a hard look and analyze what aspects of your life you’re spending on the most, what portion of your income goes toward paying off debts and how you can curb that.
Finally, you’ll want to create a well-organized budget in some form or another, whether it’s an old-fashioned pen and paper budget, an Excel spreadsheet or a type of financial software.
Basics For Anti-Budgeters
It’s an undisputed fact for many people — budgeting just isn’t exciting. Particularly for young people, creating a sensible budget is not attractive, but the idea of spending is attractive. However you’ll soon find that spending catches up with you, especially if you’re spending on credit cards. Debt can happen very quickly and can completely turn your life upside down if you’re not prepared. Nevertheless, that doesn’t change the fact that some people just don’t like to budget.
There are some basics even the most stubborn anti-budgeter can stick to that will allow them to breathe easy while still having a good sense of their financial abilities. One big thing an anti-budgeter can do is to save. Yes, saving isn’t much fun either, but it can be a lot easier if you approach it like paying a “special” bill. Take out a little money each month and put it away for that special bill — it’ll eventually add up into a nice little savings account, and you’ll be surprised how quick.
Another thing for the anti-budgeter in debt to do is to give yourself some spending room. Budget your finances every month so that obviously your financial obligations come first, but you’ve got a little wiggle room to splurge here and there and feed your impulsive side a little. That can be as small an amount as $20 per month on something materialistic, just to let yourself have a little fun.
Of course, just as you should if you’re budget-conscious, make sure your debt is a priority. Pay more than the minimum payments on your cards and loans, and forbid yourself from opening any new accounts and putting yourself deeper into debt.
For anyone looking to budget, prioritizing is key — but people in debt have an even bigger reason to make sure their financial responsibilities are front and center in their monthly budget. It’s really not that hard… give it a try!