Here Is How To Get Out of Financial Debt

Being in debt is never fun. Although many people tolerate it for a long time, at some point it often becomes intolerable – and then people start looking around for a solution.

Of course, quick solutions are difficult to come by when money is tight, and lenders may not provide the consolidation loans needed at that time. The good news is that there are other ways that may work just as well – possibly even better. Here are five powerful steps to get out of debt.

Determine to Become Debt Free

In order for a debt solution to last, some extra steps will need to be added to the steps taken to actually reduce debt, and then remove it. The truth is that many people, who do get debt loans, often end up back in debt again before long.

It is important to make a goal to seek to stop that cycle of debt. Otherwise, the same problems with creditors and tight finances will return. It is a far better solution than mere debt management to determine to simply stay out of debt in the first place.

Determination will be needed to become debt-free, and once that happens, the end of the cycle is near. At that time, words like debt relief, debt services, and debt solutions, will not need to be in the vocabulary – except to tell others that becoming debt-free is possible.

Establish a Budget for Better Money Management

This is the real key to efficient money management. Budgeting can help find money going down the drain and it can also create ways to save money, too.

Without a budget that is practical and accurate, there really is almost no way to prevent the monster of debt from rising up as a threat again. Developing and regularly tweaking a household budget will provide the essential tools for financial victory in the future.

Expose and Eliminate Sources of Unnecessary Waste

Most households have several ways that money is being robbed from their pockets including playing online casinos in Kenya, Malaysia, Singapore, and a couple of more gambling countries. When finances become tight, this often means that by careful watching and accounting of the household money on a regular basis, ways can be found to create a larger cash flow to reduce debt.

More money can be turned loose toward reducing debt by eliminating some of those extras that are not needed. Things like eating lunch out every day, a daily latte, cigarettes, the best satellite programming for the TV, fastest Internet speeds, etc., are all things that could be removed or reduced in order to put more money down toward paying off debt.

Start Working Seriously Toward Debt Elimination

Once those sources are identified that are consuming the extra money, the money can then be diverted toward the elimination of those debts. The minimum always needs to be paid on each bill, and whatever additional money can be paid each month should be applied as well.

A great way to free up more money faster is to apply extra money toward the smallest bill, and pay it off first. This will enable more money to go toward other bills. Also, be sure to pay the bills on time, so that late charges are not incurred.

Discover Best Places to Save Money

Preventing debt in the future is a good reason to have a savings account of some kind. Be sure to investigate ways to save and find out what the best fees and interest rates are in the community. This will build up the account faster.

Although these steps may seem rather simple, each one is powerful and will enable people to get out of debt – and stay out. People who are tired of debt can do something about it – but the steps need to start today to enable that better future.

Basic Monthly Budget – Household Expenses List

Budgeting for household expenses is not a simple task, and every family incurs different expenses, which makes the process even more difficult to standardize.

Learn about a list of household expense allocations and find out where to download a free Microsoft Excel monthly budgeting spreadsheet template.

Basic Monthly Budget

The relevant website attempts to make the budgeting process simple by providing an online budgeting calculator that suggests percentage allocations for major household expense categories. Users must simply input a household’s gross income, giving levels, and tax burden. Note: Anyone who does not tithe can simply enter zero in that box.

List of Household Expenses – Standard Family Budgeting Example

Below is the calculator’s list of household expense categories and suggested standard budget percentages for $45,000 annual gross income with a $7,000 tax bill.

• Housing: 36%

• Food: 12%

• Auto: 12%

• Insurance: 5%

• Debt: 5%

Entertainment / Recreation: 6%

• Clothing: 5%

• Savings: 5%

• Medical / Dental: 4%

• Miscellaneous: 5%

• Investments: 5%

Amounts Will Vary from Standard Monthly Budget Example

Based on this income scenario, the site indicates that 6% should go toward child care or school expenses if the household has children in school or daycare. Since the percentages above add up to 100%, a household with children should reduce another category or combination of categories by 6% total to allow for child care.

How Lower-Income & Higher Income Household Monthly Expenses May Differ

Households with substantially lower or higher incomes than the $45,000 indicated in the scenario above will need to adjust percentages accordingly. There are minimum cost levels in each category, and no matter how low an income goes, that minimum level will remain essentially the same.

A lower-income household may pay a larger percentage of income toward housing, food, auto, insurance, and medical bills; the same household may not have enough money left over at the end of the month to invest. Conversely, a much higher income household may have more than 5% available for investing or may spend more money on recreation and miscellaneous expenditures.

Free Microsoft Excel Budget Worksheet Templates

Some individuals may find it easier to start with a pre-populated personal budgeting spreadsheet template instead of analyzing hypothetical monthly expense percentages.