How To Budget When Struggling With Debt
Debt is a difficult and stressful weight that some of us might have to carry in life. Similarly, budgeting whilst struggling with debt can also be a stressful thing to do. But, that does not mean we should not do it, because, in the end, it will be a positive result.
When you begin budgeting you will be able to see all of your incoming and outgoings in front of you if you do it properly. This way you can grasp a better understanding of your finances and what to do with them. The great thing about this is that you can categorise everything to ensure you do not overspend on things you should not.
We have put together a list of steps to follow to create a budget when struggling with debt, but please note this way might not work for everybody.
Gather Your Data
Before you do anything you need to make sure you gather all your data to ensure you know everything you need too. Doing this will allow you to get to the next step of the budgeting process. There are plenty of easy ways to do this including:
- Viewing your most recent bank statements.
- Checking credit reports.
- Looking at your credit score to find out if you’re eligible to lower your interest rates or for a debt consolidation loan.
After you have gathered your data you should analyse it to get a better understanding of your incomings and outgoings each month. This way you will be able to see the essentials and non-essentials in your daily life. Once you have thought about this, you need to start to order a list of essentials to non-essentials with priorities like bills, debts and vehicle payments at the very top.
After you have made the list you should think about what you need to change in your everyday life to allow you to be able to repay what is essential. Then consider paying for the other necessary things on your list. As you go along and you have less debt to repay you can then begin to rethink your budget. This way you will be able to always keep it relevant and up to date.
If you have got any money remaining after you’ve paid for everything you have a ‘budget surplus’. But, if you’re spending more money than you’ve got coming in you have a ‘budget deficit’.
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Categorised in: General
This post was written by Charlotte K