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How a Budget Can Help You Pay Down Debt

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Working with a budget to get through your monthly financial expenses doesn’t mean you’re poor or have to do without. Many people believe that if you have a budget, you’re unable to do things in your life for personal enjoyment. This is the complete opposite. It is imperative for everyone to live on a budget so you can meet your financial goals and also pay for all the enjoyment in your life in a responsible manner.

If you’re experiencing some difficulties with debt, your budget is the most important tool for you to use. This will keep you and your family on track.

The very first thing to do when creating a monthly budget is to outline your obligations for the entire month – housing, utilities, parking, groceries, gas, clothing, car payments, insurances and debt repayments.  Can you afford to contribute even $10 more to your debt repayment? This could save you hundreds of dollars in interest over time.

Secondly, incorporate more optional items such as entertainment, gifts, eating out, and so on. What is your monthly amount for savings? Laying out how you wish to live day-by-day will not feel like living in a financial jail. Eventually, you will start to feel free from the stresses of financial worries.

Another way to develop your budget is to cut up the cards. Don’t cancel your credit card as this could negatively affect your credit. Instead, cut them up! Cutting your credit cards will stop the temptation of whipping it out at a store and paying for something you don’t need before you can even realize you did it. Take out enough cash each week to live off your monthly budget. This will be difficult at first, but like many things, it will become routine.

Lastly, write down your expenses. You’d be surprised the number of people who don’t actually know what’s being spent on a monthly basis. Start keeping track in a simple chart or Excel spreadsheet about where your money goes. This will be important information to incorporate into your budget. $50 here, $100 there and $200 over here adds up very fast.

Your budget, whether you’re living in debt or not, is an essential tool for you to live in financial freedom. No matter how big or small the debt load is, starting with a budget is an essential tool to your debt relief program. If you are looking for help in creating a budget, contact Credit Counselling Services of Atlantic Canada today. We can help you create a budget to help you get out of debt and stay on track.

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