If you are having debt problems, one of the best pieces of debt advice that can be given is to make a budget. That way you are going to know exactly what money you have coming in and what you are spending it on. From there you can prioritise payments and be clear about how much you can afford to pay on your unsecured debt each month.
Your Income
When you’re making a budget, first note down how much you make each month. As long as you are getting a monthly salary, or you’re paid a fixed amount every week, that is going to be easy of course. Just make sure that you only count what you get after tax.
When you have a job that does not pay you a fixed amount, perhaps you are working on commission for instance, then the best thing to do is to look at the average. Also note whether you have particularly good and particularly bad months. If you do, then the best thing to do is to save whatever you get above the average so that you can use it to cope with months when you get less.
Remember to include not just your income, but the income of anyone else who is responsible for the upkeep of the house. Actually, it would be useful to note if you have adult children living at home what their income is as well, as asking them for board payments might be a way to increase your income.
Once you have your complete budget, if you’re having problems each month then it’s likely that you are spending more than is coming in. One way to go about remedying this is by increasing your income.
There are many ways that you can think about increasing your income, the most obvious one being to get a second job. It’s also possible though that you are eligible for government benefits or tax breaks that you are unaware of, so it’s worth looking in to that as well.
Your Expenses
After you’ve completed the “income” side of the budget, it’s time to move on to the expenses side. For the moment you should simply note down what your expenses are right now, and although you should include everything you don’t have to get too detailed. For instance, it’s not necessary to itemize all of your food shopping at this point.
Although it may be tempting to start making cuts straight away, at places where you think it is necessary, it’s not a good idea to do that yet. For example shaving away what you actually spend on things like food, because you know that you can spend less. The idea at the moment is to get a clear as possible picture of where you are right now.
You’re probably going to find, if you are having trouble paying for everything, that you are actually trying to spend more than you are getting in. And if you don’t find that, then you may have underestimated how much you spend, or overestimated your income. Now though you can think about getting professional debt advice on the best debt management techniques.
In addition to reducing your debt levels, you should also think about how you can make other reductions in your budget now. To do this you are going to have to prioritise your payments, meaning that you make sure you pay for all of the most important things, like food and the mortgage so that you are not short on those.
Once you have made the calculations regarding your essential living costs, it’s going to be clearer how much your have to cut back on everything else to be able to cope with the debt. By having a budget, it also means that when you contact debt advisers in order to get free debt advice, you’ll be able to tell them exactly what your disposable income is which will prove to be very useful information.
If you want more advice regarding how to make use of Debt Advice, go to the site where author Dylan Adams often writes: http://www.debtadvice.net.
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