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Debt Management Plans – Credit Card Debt Reduction
- Published: September 18, 2010 by Umma Queenan Comments (0)
One of the things that really gets us into trouble financially is that we either don’t have a budget, or we don’t follow the one we took the time to make.
There are many useful tools available to teach you how to make a budget and stick to it, but the point is, you really need a budget if you are ever going to get a solid handle on your finances. It might take several months to come up with a plan that works for you and/or your family, but in the end you will finally see the light at the end of the tunnel.
Of course the very first thing when making your budget is to take your monthly income from all sources and total that into one column. Next you take your expenditures and total them in another column.
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Unfortunately, if you are like so many of us, column B is larger than the column A, and that can be a real problem. However, for the sake of understanding just how effective budgets really are, we won’t go there, for the moment. We are going to assume that the two columns are at least somewhat equal.
The biggest mistake that most people make when budgeting is allowing enough money for food, household products and personal care items. Once you have estimated what you usually spend on groceries, add to it by perhaps 10% to allow for any contingencies. Remember, the point of this budget you are creating is that you are going to require yourself to stick to it religiously.
Furthermore, you need to account for variables like utility bills that fluctuate seasonally. Heat in the winter can drastically increase your electric or gas bill just as running the air conditioner in the summer puts your bill through the roof. Some utility companies allow you the option of paying a set amount each month based on an average of the previous 12 to 24 month bills.
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For budgeting purposes, this is a real gift. The object is to know exactly what your expenses are each month so that you can plan for them without grabbing from another category. Old timers call this “robbing Peter to pay Paul.”
Although this is an extremely simplistic look at budgeting and how it can help you to take control of your finances, you can easily see that the only way to get back on track is to make a plan and stick to it at all costs. In addition, you might want to consider adding a category called something like “contingencies” or “emergency fund” in case unforeseen issues arise.
Rather than taking money from some other area, you have a built in fund that will continue to grow if you don’t have to touch it. And, by all means, if it is not an emergency, don’t use it! Let it grow and put it in a savings account or CD at the end of each year. The only way to effectively get out of debt and stay out of debt is to follow your plan. Budgeting is your road map to financial security, so don’t stray from the path.
Related posts:
- Debt Management Plans- Best Way to Get out of Debt
- Do-It-Yourself Credit Debt Solutions
- Help with Credit Card Debt : Avoid These Mistakes
- Credit Card Debt Solutions : Understanding What You Can Do to Restore Your Credit
- How to Reduce Credit Card Debt the Easy Way
