Budgeting

I often advise people seeking credit card debt relief to begin with taking a hard-nosed look at their spending habits before they make a determination about the solution they should choose. You see, every so often getting relief from scary debt is as simple as locating hidden money you already have by creating a workable family budget that is still elastic enough to respond to unforeseen circumstances that will arise. Notice, I said WILL and not MAY arise because given the ambiguity of life, clearly stuff happens that resides completely outside of our control. The following discussion of budget guidelines is intended to introduce you to developing and managing the budgeting process successfully.

While appearing trouble-free, budgeting can be desperately tricky. All you need do is takeaway what you are spending from what your income is, and that is the money you have left over for discretionary use. Just set some spending goals and stick with them. Seems easy doesn't it? But unfortunately, this is not the case for most people.

For the majority of people, their budgets suffer defeat for the same central reasons; the tips below will help to set up your budget and keep it on course.

Tip 1 - Look at what you are spending

Since we all have unique needs and desires, using a predetermined budget formula is generally unsuccessful. For example, if you drive to work every day then gasoline is a priority item on your agenda whereas if you take the bus to work you are going to include the cost of the fare in your calculations.

The proper approach to crafting your budget is to first gather data on what you are presently spending and then analyze those data to prioritize and master that spending in the future. Your analysis includes the identification of waste and finding less expensive alternatives to your needed expenses. For example, if you drive to work and your gas costs you $50 a week, perhaps you can switch to public transportation at a cost of $10 a week, thereby saving $40 each week. You must avoid any percentage rules that many so-called budget experts advocate; achievable budgeting requires you to cut-back and amend your current spending until you can no longer find cuts or alterations.

Tip 2 - Be Accurate with the Data you list

When you are making a list of your income and expenditures, it is vital that you accurately write down expenses and income as they actually are not what you conger up. Avoid rounding expenses to the nearest dollar, rather, record your expenses to the last penny.

For out of pocket expenses, track them for a minimum of 21 days. For your basic expenses like food and utilities, track for 3 to 4 months to assure that you have a clear handle on your current expenses. So do not forget to include the latte you have every morning as you go into work, or your expenditure figures will not provide you with an accurate figure of where all your money is being spent.

Tip 3 - Do not forget those quarterly, semi-annual or annual expenses

There are a few things which could cause your budget to fail, and forgetting about those quarterly, semi-annual or yearly expenses that you have is one that can make this happen. Be sure to include things like clothing, school tuition, insurance premiums and taxes. You should also include a slush fund to handle unforeseen expenses like automobile repair, home maintenance, and other potential surprises during the course of any year. So, look at putting aside a little each month, and then your budget will not be ruined when these expenditures are due.

Tip 4 - Review your Budget Constantly

Many people make a budget plan and then just simply file it away, but this is one financial tool that must be reviewed frequently. Especially during the first six-months, your budget needs constant monitoring and revision to make it achievable. Remember, your budget is not set in stone, and is constantly in need of revision to reflect your financial reality. By keeping a close eye on your budget, you make sure that it continues to work for you.

The good news is simply this, budgeting and budget follow-up is the best way to become debt free and financially stable. Make no mistake, budgeting is hard work but it yields a harvest that is unmatched by any other tool in your financial toolbox. Give yourself three months, and work really hard at it, and you will soon begin to see the changes in your financial situation. Then you simply have to keep it up.