Budgeting Your Finances
There are many methods to help you get out of debt, and one of these is clever budgeting. If your serious about your goal to having a debt free lifestyle then this is a must do. It is not so hard to budget your money, it just takes determination and will power.
Take control of the flow of money into your household, know the important expenses from the non important ones and prioritise accordingly. Having a budget plan helps you track all your expenses effectively and can show you the areas of your spending which can be improved. When you do this, you will soon see that a few minor changes to your spending habits will benefit you ten fold over time. Be your own Debt Advisor! Use our free Budget Planner to help you do this.
Cut back on unnecessary expenses
After assessing all your expenditure, decide on which are priority and which are not. Cut off the unnecessary ones, at least for a while. You will need to do this if you don’t want your debts to accumulate. Next calculate your total income per month and then minus your expenditure from this. This will leave you with your disposable income. Next look at how much money goes to your credit cards, loans and also the interest paid on each, Make a note of each one. Divide your disposable income evenly over your creditors. Always try and pay as much as you can to your credit card’s to avoid paying the full interest charge - that is if it is not out of your budget. There are also method you could look at which would help reduce your debt faster. i.e. a balance transfer or Consolidation Loan.
Change your habits
When budgeting, changing your spending habits is one of the hardest things to do, but it will benefit you in the long run and will help you get out of debt faster. Look at every area you spend in, even things like your lunches. If you make homemade sandwiches for lunch you could save approximately 50% on buying pre made sandwiches. Buy from supermarkets instead local convenience stores. The average convenience store tends to be up to 60% more expensive on certain items. Cut down on going to the cinema by watching DVDs at home. Look for offers in your local DVD rental stores. Or if you really enjoy going to the cinema with a friend or partner get yourself an Pay As You Go Orange sim card for your mobile phone and apply for the two for one discount on ‘Orange Wednesdays’. Think of all the ideas that you can cut costs on and jot them down; no matter how small it is it will make a big difference in the long run.
The hard part in budgeting
Sticking to your budget plan is a difficult job. If you want to make it effortless, be practical on your spending. If you have lots of catalogues at home, you may want to put them away for a while to avoid the temptation to buy something you think you need. Keep in mind that what you are doing will have a positive result and eventually help you to get out of debt. Try and avoid applying for Debt Consolidation Loans or Loans for Bad Credit, as you can never usually borrow your way out of a debt. If you are really struggling and don’t know where to turn for help contact the UK Debt Advisor to help you calculate your disposable income and negotiate with creditors on your behalf.