Budgeting to reduce your debt (part 6)

Constructing your budget draft

After a couple of months of careful tracking, you can start constructing a very good budget that will be so detailed that it will be hard for you to fail unless you completely go off your personal allotment of spending.

This is where you will be able to take a detailed look at your past expenses in order to determining how to reduce spending and where to put that extra money.

For the bills you have each month that are fixed priced, you simply budget that amount for each month. For basic expenses such as gas and groceries, budget the exact amounts you spend the month before as long as you did not live outside you means.

There are always ways to cut costs when it comes to basic expenses because you are not required to pay a certain amount on these types of expenditures each month. Your car payment and mortgage/rent will be the same each month. You can’t cut corners there unless you refinance.

Once you are able to form an accurate and detailed account of your outgoing expenditures for each month, you will need to compare that total to how much money you are actually bringing home each month from you job. If the bills you have are more than the amount you are making – you have to tighten your expenditures anyway you can to close that gap. Be sure to budget and have money left over each month that you can pay extra on top of your minimal credit card payments so you can work towards being debt free.

Hopefully, once you have created your budget, your income will in fact be much more than what you are spending each month. But, if you are in debt, it is probably because you spend more than you make each month – or you would not be in enough debt that warrants you’re need to read this debt free article in the first place. You will not be helping yourself or your debt problems if you continue to spend more than you make. In fact, you have to make a lot more than you spend each month to work at getting out of the debt you have acquired this far in life.

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