Creating a budget and sticking firmly to that budget will help you dissolve your debts magically. A budget lends discipline and order to the process of eliminating debt and good budget is the basic and most important weapon in a war against debt.Before you create a budget you need to make lists. List what you spend on every day. List what expenses are essential and eliminate all expenses that are not required. A separate list of annual or half yearly payments and a list of possible emergency payments will help you make a good budget for debt repayment. Example:
- Rent / Mortgage
- Groceries
- Utilities
- Car Payment
- Car Insurance
- Car maintenance / Fuel
- Entertainment
- Dining out
Calculate your income and how much you need to feed each of these lists and what percent of your income you can use to repay debts in a month. Make a list of debts and make another list of what debts you have to repay as a priority and repayment of which of your debts can be delayed. Keep a spreadsheet with the list of debts and make a note of which debts you have repaid daily. Keep a separate spreadsheet with your household budget and enter a daily account of expenses to make sure that you don’t exceed the budget. Do not use the amount kept aside to repay debts for expenses. However if you have money in excess of your other expenses you should use it to repay your debts. By creating a sensible budget and refusing to spend a cent beyond the boundaries of the budget will help you melt debt away in a matter of months.
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