Using a Budget to Get Out of Debt - Part 2

The process of making a budget for your family is really not too hard. First, you list your revenue (your salaries, wages or any other income), and then you list your monthly expenses.

You have to include all of your expenses and income or it will not be accurate. This means groceries, gasoline, car insurance, mortgage or rent, and every other normal expense you have every month.

Then subtract your expenses from your monthly income. The balance is an amount of money that you have available to use to get out of debt by paying off your creditors.

Although you could try to pay off your creditors with this full amount every month, you may find that you end up in a cycle of paying this amount until an emergency arises. Then you would probably borrow again to make ends meet. This would defeat your purpose.

After you have figured out how much you have left over after expenses, you need to decide how you are going to use this money to pay off your bills every month.

It is best to deposit a certain percentage in a savings account every month (for emergencies). If you do not have a "safety net" of money in reserve, it is too easy to borrow from high interest credit sources to meet your needs.

With the money you have left over after depositing a percentage every month in your savings account you can start paying down your debts. You want to focus on repaying the bills that carry the highest interest penalty. This is usually your credit card bill.

Make a plan that will pay the most money to your credit card company and still keep you current with your other creditors. This is a simple and easy to follow formula that will help you pay off your creditors faster and build a reserve fund should you need it.

You will discover that money management can be interesting, and maybe even fun. It is exciting to see our debts dwindle and watch our savings grow. It only requires a good plan and the will power to see it through.