How Budgeting Can Take You From Drowning In Debt To Debt Free

Living with large amounts of debt can leave you feeling frustrated

, scared, and even helpless. If you are struggling to get out of debt, there is hope and there are ways you can help yourself without taking extreme actions such as filing for bankruptcy. Though getting out of debt cant happen overnight, simply setting a budget to live by can help you get your head above water and take you from drowning in debt to debt free.

Income Vs. Expenses

The first step in setting a budget is to get a handle on your monthly income versus your monthly expenses. To do so, you need to face your finances head on and put everything on paper. Make a list of all sources of monthly income and how much you get from each. Regular sources of income in addition to paychecks may include child support or alimony payments. Next, total up all of your regular monthly expenses. Certain expenses will be fixed from month to much such as your mortgage and car payments. For variable expenses such as groceries and utilities, jot down the highest average payment for each.

Net Monthly Income

Once you have a list of your income and your expenses, youll need to determine your net monthly income. Your net income is how much if any money you have left over each month after expenses. After you calculate your net income, its time to make adjustments in your spending, particularly if your net income is negative, meaning you are spending more money than you earn. As you look for places to make adjustments and cut spending, focus on your variable expenses. Cut coupons or buy generic brands when grocery shopping, opt for cheaper cell phone and cable plans, and plan on cooking more meals at home and taking fewer trips to restaurants. Every dollar that you cut from your variable expenses can and should be put toward paying down your debt.

Living Within Your Means

By setting and sticking to a budget, you can discipline yourself to live within your means. When you spend less than what you make, not only will you be able to pay your debts, but you will avoid landing yourself in even deeper debt. Remember, spending more money than you have is what gets people into debt in the first place.

For more advice and information on money management and how to get debt free, contact a reputable non-profit credit counseling agency.

by: William Hauselberg

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