How to Avoid Debt With Good Budgeting

If you’ve managed (or mismanaged) to get yourself into a boatload of debt, there are ways to insure that this never happens again if at all possible, and the cornerstone of these ways is a sound, well-thought-out budgeting program. While this may not seem like a very sexy answer to what appears to be a huge problem, it is in fact the most essential part of your future going forward from here.

If you don’t manage your money better, you’ll only end up in the same position all over again. I have known many who have dipped their toes in this well far too often, and it has been not only their financial ruin, but sometimes also at the cost of their families. Debt and sensible budgeting are definitely things to get a handle on! Let’s look at some of the ways you can do that.

First of all, if you are married, this needs to be a joint effort. Nothing will bring ruin to a marriage faster than a spouse running rampant with the finances. You need to be in agreement here, both on the totals and the categories of spending. There needs to be give and take. There needs to be some hard questions. There needs to be an accounting of your financial lives that takes into account your needs, and what you can live without. You need to be totally honest with one another, or this is simply a waste of time.

Many people who are in debt trouble resort to the envelope system, where you put each month’s allotment for certain expenses into an envelope in cash, and when this is gone, so is the budget for the month for that item. Obviously, things like your mortgage won’t fit in this envelope, nor should automatic payments. This is intended for controlling discretionary spending that has gotten out of hand and needs to be tracked.

It is surprisingly effective. Some of the categories you might consider are clothing, entertainment, eating out, even Starbucks. I know people who were shocked to discover that they spent several hundred dollars a month there!

The main point about implementing a budget needs to be the long-term aspect of all this. It will do you next to no good to do this for a month or so. Sound household budgeting is really no different than using a budget for your business. Most people wouldn’t consider running a business that way, so neither should you run your home that way. It is YOUR business!

In this day and age when prices keep creeping up and saving is getting harder and harder to do, make it easy on yourself and find the extra dollars to save and invest in the money you already have.

There are free budgeting forms available all over the web. Find one you like and start using it, and maybe, just maybe you’ll find more money at the end of the month this time.


Secrets Of Living Debt Free

The concept of debt free living is an easy one. Earn more than you spend and don’t allow yourself to live beyond your means. This is much easier to understand than it is to apply however. As a nation, we’ve seen our national deficit grow into the trillions of dollars. In towns and cities across America, people find themselves heavily indebted for homes, automobiles, education, credit card debt, and many other things. It’s safe to say that anyone burdened with cumbersome debt would like to find a way to live debt free. The only way to live debt free is to embark on a path that will lead to paying off your obligations. Everyone with this desire will find themselves at a different starting point, although the finish line is the same for everyone: a life where we spend less than we earn.

The first step to debt free living is analysis. A borrower must understand the depth of their debt problem before they can hope to eliminate it. A simple cash flow analysis is the best way to start; making a list of your monthly obligations and comparing it to your monthly income.

For many people, there is a shortfall that is creating the debt problem – if you need to get out of a hole you’re in, the first step is to stop digging. Finding a second job or changing your career to increase your income might be necessary. Trimming the excesses from your budget is important as well. Are there things you’re paying for that you can do without?

The second step is to implement your plan. Determine how much income is available to pay down debts after your monthly expenses are met. Get rid of your credit cards so you aren’t tempted to use them and throw your debt reduction plan off-track. If you need to consolidate your debts or negotiate with creditors, find a trustworthy credit counselor who can help. Be vigilant in tracking your budget and set goals for yourself to hit certain milestones in paying off your debt. The feeling of paying off that one credit card with the highest interest rate will motivate you to keep going in the right direction.

The final step is to monitor your plan and stay on target. If you establish realistic goals and get organized, you’ll know exactly how long it will take you to get out from under your debt. Work every month to reach your goals and find a way to reward yourself when you achieve positive outcomes. Look for opportunities to increase your income or reduce your expenses along the way. Track your progress on a monthly basis to ensure success.

Debt free living is a challenge for everyone, but it’s the only place where true financial freedom is found. It’s a process that usually can’t happen overnight, but the habits you develop in achieving your goals and living debt free will allow you not only freedom today, but the capacity to save for tomorrow.


Getting Help Paying Off Student Debt

One of the most important loans an individual will ever receive is a student loan. Through student loans, college students are able to attend universities around the world, preparing for a career and successful life. Without student loans, many students would never have the option to attend college. Scholarships are only available to a small number of college students and the cost of a college education is increasing dramatically every year. Unfortunately, many students take on debt before they have the necessary knowledge to make wise financial decisions. Fortunately, there is help available to keep student debts manageable.

College is the most expensive period of time in most students’ lives. As of late 2007, the total cost of a year of college, including room and board, was over $32,000 in private universities and nearly $14,000 in public schools. This was a 6.3% increase from the prior year, and costs are expected to keep rising. Most students and their families are not in a position to pay this expense out of pocket. One way to keep student loans manageable is to be aware of scholarship and grant opportunities that a student might qualify for. Reducing the expense to the student is a great way to keep debt from becoming a problem later in life.

One key to managing student debt is to know the various repayment options available. Many lenders offer a graduated repayment schedule, where payments increase as time goes on, since most people will make more money as time passes after college. There are also ways to show your lender that you’re making lower than average income to get payments reduced, although you’ll pay more in the long run and you’ll probably have to reapply every year for the lower payment. Another option is loan consolidation, where student debt is bundled with other debts and paid off so the borrower can focus on paying one big loan instead of several small ones.

Many loan programs also offer deferment, allowing a borrower to defer payments until a later date, although there are qualifications that must be met. Some of the factors that make a borrower eligible for deferment include being unemployed, being a full time student, active military duty, earning a low income, or on maternity leave. Deferment allows the borrower to defer monthly payments, but does not change the amount that is owed to the lender.

The final key to successfully managing student debt is keeping the rest of your financial life in order. College educations are great, but unfortunately some students leave college without a grasp on basic life skills such as budgeting. Learning to live within your means and to be able to resist making major purchases that could lead to financial stress and additional debt will help to ensure that student loans remain a manageable part of your budget.

Student loans are a great and necessary tool with today’s college costs, but there’s no reason that student debt should ruin a borrower financially.


Living Debt Free

The concept of debt free living is an easy one. Earn more than you spend and don’t allow yourself to live beyond your means. This is much easier to understand than it is to apply however.

As a nation, we’ve seen our national deficit grow into the trillions of dollars. In towns and cities across America, people find themselves heavily indebted for homes, automobiles, education, credit card debt, and many other things.

It’s safe to say that anyone burdened with cumbersome debt would like to find a way to live debt free. The only way to live debt free is to embark on a path that will lead to paying off your obligations. Everyone with this desire will find themselves at a different starting point, although the finish line is the same for everyone: a life where we spend less than we earn.

The first step to debt free living is analysis. A borrower must understand the depth of their debt problem before they can hope to eliminate it. A simple cash flow analysis is the best way to start; making a list of your monthly obligations and comparing it to your monthly income.

For many people, there is a shortfall that is creating the debt problem – if you need to get out of a hole you’re in, the first step is to stop digging. Finding a second job or changing your career to increase your income might be necessary. Trimming the excesses from your budget is important as well. Are there things you’re paying for that you can do without?

The second step is to implement your plan. Determine how much income is available to pay down debts after your monthly expenses are met. Get rid of your credit cards so you aren’t tempted to use them and throw your debt reduction plan off-track. If you need to consolidate your debts or negotiate with creditors, find a trustworthy credit counselor who can help. Be vigilant in tracking your budget and set goals for yourself to hit certain milestones in paying off your debt. The feeling of paying off that one credit card with the highest interest rate will motivate you to keep going in the right direction.

The final step is to monitor your plan and stay on target. If you establish realistic goals and get organized, you’ll know exactly how long it will take you to get out from under your debt. Work every month to reach your goals and find a way to reward yourself when you achieve positive outcomes. Look for opportunities to increase your income or reduce your expenses along the way. Track your progress on a monthly basis to ensure success.

Debt free living is a challenge for everyone, but it’s the only place where true financial freedom is found. It’s a process that usually can’t happen overnight, but the habits you develop in achieving your goals and living debt free will allow you not only freedom today, but the capacity to save for tomorrow.


How to Get Out Of Debt

One of the most frustrating financial situations for a consumer is carrying unnecessary debt. The amount of debt being carried by Americans is rising every year, and the deeper into debt they fall, the harder it can be to recover. We live in a society where people want to live like they’re rich today and are willing to go into debt to have nice cars and material possessions. Getting out of debt is very difficult, but the financial freedom that results is worth the sacrifice. There are several ways that a consumer can overcome debt problems.

In order to have the necessary motivation to get out of debt, it’s important to first realize the negative consequences of being in debt. First, debt is a promise to pay, in most cases every month, until the amount you borrowed has been returned to the lender. As a consumer’s debt level increases, the monthly payments require an increasingly large portion of that consumer’s income. This leaves less discretionary income, reducing financial freedom.

High interest rates mean you’ll be paying significantly more for the items you purchased than their actual sticker price. Second, debt can hurt a consumer’s credit score, especially if there is a history of missed payments. A low credit score can make it impossible to get a loan when you really need one. Finally, debt is stressful. Families carrying large debt balances, especially credit card debt, experience emotional stress that can make it difficult to enjoy other areas in their life.

The most important element in getting out of debt is commitment. The borrower must commit to stop adding to the debt balance. Paying down debt is meaningless if you’re just making room in your credit line to reload with more debt. Realize that it will require sacrifice and discipline, and you will probably have to hold off on purchases you’ve been thinking about making. Resolve to do whatever it takes to eliminate debt from your life. Commit to keeping a budget and controlling your spending. Have a plan on how you will tackle your various debts.

Professional help is also an option for those trying to get out of debt. Credit Counselors are available to discuss financial situations with consumers and help them weigh their options. Some of the solutions they may discuss with a borrower include debt consolidation loans, debt negotiation, or even declaring bankruptcy. All of these alternatives have serious consequences that need to be considered and understood before making a final decision. It’s also important to make sure that the professional help you seek is credible, reputable, and reliable – we live in a day and age where scams are everywhere and people are lined up to profit from other people’s debt problems.

Getting out of debt will probably be one of the most difficult things you ever attempt to do, but can also be one of the most rewarding. Regardless of your level of debt, finding a way to get out from under it is a worthy goal.