If you're currently in the midst of a debt problem, it's time for you to find a way out of it. While bankruptcy is a great option for many, a lot of borrowers are able to quickly climb out of debt by creating and sticking to a budget. Essentially, the process of budget creation involves these primary steps:
1. Total up your income
You're going to want to add up every source of income you have. This includes the income from your job, income from investments and income from any kind of side-employment activities. Get a total figure that you can count on for each month.
2. Total up your necessary expenses
Your expenses will cover everything from utilities, vehicle costs, transportation, food, entertainment, insurance, child care costs and any other regular monthly expenses you can think of.
3. Track how you spend your money
You'll want to know exactly where you spend every dollar each month. To do this, you can keep a record of everything you spend, or you could simply use a credit card and not make any cash purchases. Using a credit card will help you track everything electronically.
4. Analyze the above information closely
Once you've added up your income, added up your necessary expenses and tracked where you spend your money, you can start to set up a budget. Be sure to eliminate any unnecessary expenses when you do this and leave some "fun money" to make your budge reasonable.
As a part of your budget, you will want to designate the money that you will use to pay off your debts each month. The more money you can devote to this process, the faster you'll pay down your debts and the sooner you'll start to get your financial situation under control.
Source: FindLaw, "Creating and Sticking to a Budget," accessed Jan. 12, 2018