| Budget Your Money To Get Debt Free |
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| Written by Richard DFO Hijinx |
| Friday, 04 September 2009 10:16 |
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Ok, so you somehow wandered upon create a budget and are probably thinking about how in the world to get out from underneath a pile of debt. This is a problem that baffles and eludes many people but the answer is much easier than the actions putting the answer in to motion. Though it is difficult to become debt free, it CAN be done and we will guide you on the journey there.
Alright, so you somehow stumbled upon create a budget and are likely thinking about how in the world to get out from underneath a pile of debt. This problem baffles and eludes many people but the answer is much easier than the actions putting the answer in to motion. Though it is difficult to get debt free, it CAN be done and we will guide you on the journey there. The first major step in becoming debt free is knowing where you stand financially. This means you HAVE TO create a financial budget. This is EXTREMELY important. In order to become debt free you need to know what income you have coming in and what expenses you have going out each and every month. My personal budgets take this one step further; you also need to account for expenses that are certain to occur annually, such as vehicle registrations. You may be wondering what you may need to put into your budget. I have put together an example budget below for an average American. Rent/Mortgage - $995 Auto Insurance - $115 Auto Loan - $400 Auto Loan #2 - $295 Life Insurance - $65 Water - $41 Electricity - $80 Garbage - $21 Natural Gas - $120 Childcare - $505+ Gasoline - $295 Groceries - $1005 Telephone - $39 Cable - $50 Internet - $49 Cell Phone - $99 Credit Card - $100 Student Loans - $99+ Total - $4385++ When we start looking at the financial budget above, each item taken individually does not seem like too terrible an idea. But together things start to spiral out of hand. In the above example budget we see nearly $4400 of monthly expenses, AFTER taxes. For us to be able to BREAK EVEN on this caliber of budget we HAVE TO be raking in about $70K per year. This budget doesn't even include things such as children's doctor's visits, and all the other annual crap we haven't even addressed yet, like enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost a ton of money. It's no wonder people are up to their necks in debt. Most people don't make $70K,$70,000 and most people have all kinds of one off expenditures that aren't accounted for on the above budget. In order to know where you can cut back, you must know where you stand. The first task for you people out there going over this is to do this very first step. Make a financial budget and BE HONEST - it will do you no good if it is not right. After we get this done we will be talking about such things as debt equity, discretionary spending, and financial tools. Let's get our budgets prepared so we can begin working on a plan to GET DEBT FREE!!! DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Richard DFO Hijinx has an article showing you how to create a financial budget |