How To Get Debt Free By Budgeting Your Money
3:34 AM
Alright, so you managed to stumble across how to become debt free and are probably scratching your head trying to figure out how on earth to get out from beneath a pile of debt. This problem many people must face but the answer is much easier than putting that answer into action. It is tough to become debt free, but it CAN be done and I will show you exactly how to get there.
One of the first major steps in becoming debt free is in knowing where you stand financially. Knowing where you stand financially means you HAVE TO create a financial budget. Creating a budget is EXTREMELY important to your long-term success. For you to become debt free you must know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must take into account expenses that are certain to occur annually, such as license registrations.
What typically goes in a financial budget? Below, you will see what a typical expense budget may look like for an average American.
Rent/Mortgage - $1000
Auto Insurance - $115
Auto Loan - $405
Auto Loan #2 - $300
Life Insurance - $64
Water - $40
Electricity - $79
Garbage - $19
Natural Gas - $121
Childcare - $505+
Gasoline - $295
Groceries - $1000
Telephone - $39
Cable - $49
Internet - $49
Cell Phone - $101
Credit Card - $101
Student Loans - $100+
Total - $4385++
Looking at the finances shown above, each item taken alone does not seem like too horrible an idea. But together things begin to get out of hand. In the above budget we have nearly $4400 of monthly expenses, AFTER taxes. In order to BREAK EVEN on this type of budget you HAVE TO be raking in approximately $70K per year. Keep in mind this doesn't include children's doctor's visits, and all the other annual crap we haven't even addressed yet, such as enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost an arm and a leg. It's no wonder people are up to their eyeballs in debt. Most people don't make $70K,$70,000 and most people have all kinds of one off expenditures that aren't outlined on the above budget. In order to know where you can cut back, you have to know what you have.
My first assignment 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 isn't accurate. As soon as we get this done we will be talking about such things as discretionary spending and debt equity. Let us get our financial budgets prepared so we can begin working on a plan to BECOME DEBT FREE!!!
One of the first major steps in becoming debt free is in knowing where you stand financially. Knowing where you stand financially means you HAVE TO create a financial budget. Creating a budget is EXTREMELY important to your long-term success. For you to become debt free you must know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must take into account expenses that are certain to occur annually, such as license registrations.
What typically goes in a financial budget? Below, you will see what a typical expense budget may look like for an average American.
Rent/Mortgage - $1000
Auto Insurance - $115
Auto Loan - $405
Auto Loan #2 - $300
Life Insurance - $64
Water - $40
Electricity - $79
Garbage - $19
Natural Gas - $121
Childcare - $505+
Gasoline - $295
Groceries - $1000
Telephone - $39
Cable - $49
Internet - $49
Cell Phone - $101
Credit Card - $101
Student Loans - $100+
Total - $4385++
Looking at the finances shown above, each item taken alone does not seem like too horrible an idea. But together things begin to get out of hand. In the above budget we have nearly $4400 of monthly expenses, AFTER taxes. In order to BREAK EVEN on this type of budget you HAVE TO be raking in approximately $70K per year. Keep in mind this doesn't include children's doctor's visits, and all the other annual crap we haven't even addressed yet, such as enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost an arm and a leg. It's no wonder people are up to their eyeballs in debt. Most people don't make $70K,$70,000 and most people have all kinds of one off expenditures that aren't outlined on the above budget. In order to know where you can cut back, you have to know what you have.
My first assignment 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 isn't accurate. As soon as we get this done we will be talking about such things as discretionary spending and debt equity. Let us get our financial budgets prepared so we can begin working on a plan to BECOME DEBT FREE!!!
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