There is no denying that families are struggling in these tough economic times and it is very common to be dealing with financial stress. Between rising food and fuel prices, staggering utility bills and a tightened job market, all contribute to the financial difficulties families are facing. Creating a budget is one excellent tool for getting a handle on your finances and, contrary to popular opinion, does not have to be complicated. You can budget your way out of debt with careful planning, effort, and even a little creativity. Here are some tips to help you budget your way out of debt and get your financial situation heading in the right direction.
Look for Bad Spending Habits
The best way to do this is to keep a journal for thirty days and write down all expenses. Not just some of them, all of them. Even that eighty five cent candy bar you get out of the vending machine at work every day. You may not even realize how fast the small purchases can add up. Once you get a good idea of where your money is going, you can make the effort to cut back on unnecessary expenses. You can also look for overspending patterns. Look to see if you shop when you are bored, lonely, as soon as you get paid or the like. By writing all expenses down, you not only see what and where your money is going, you are actively and consciously paying attention to your spending as it happens.
That may sound funny when you are trying to budget your way out of debt, but this is also an essential debt management tool to not only help you pay off your debts, but also get you financially stable as well. Start a savings account, but treat it like another bill. Make a deposit every week, twice a month or once a month depending on your specific financial situation and how often you get paid. Do not touch this money, unless it is an absolute emergency. Even if you can only put in ten dollars a week, still pay yourself. Little amounts add up fast, as you saw from your spending journal. If you pay yourself twenty-five dollars every week, in one year you will have over a thousand dollars in the bank.
If you have multiple bills with high interest rates and you are struggling to make monthly payments or if you are being harassed by bill collectors, debt consolidation may be right for you. The best thing to do is make a consultation with a reputable debt consolidation institute and talk numbers. A good debt management company will not charge for a consultation, so if it is not free, find a different one. The debt consolidation specialist can help you organize your bills into categories and see which ones can be consolidated. If you have bad credit, you may have to obtain a bad credit debt consolidation loan, and you will pay higher interest rates. However, overall, you will more than likely be paying less per month with one monthly payment rather than multiple payments. Debt consolidating is essentially getting one loan large enough to pay off multiple bills. This will also help your credit as those bills are shown on your credit record as paid off and will improve your score. Bad credit debt consolidation works best for those with high interest credit card debt. The interest rate of a debt consolidation loan is determined by the weighted average of all debt being consolidated.
Unleash Your Creativity
Look for creative ways to save money whether it is making homemade Halloween costumes for the kids, trying your hand at extreme couponing or hitting up garage sales on the weekends. There are countless ways to save money when you sit down and start thinking about it. Get rid of your landline phone and switch to a cell phone. Look for a phone through places like Amazon when you need to renew or upgrade your current cell phone. Many times, you can find the phone you want for up to a hundred dollars cheaper than the discounted phone your cellular carrier is trying to sell you.