 |
Best Bets for Paying off Debt
Don’t let financial chaos
keep you from paying off debt.
Instead, create a budget
worksheet to record income, expenses, debt, and other financial transactions.
Paying off debt with a
budget will help you understand how to take charge of your money.
Here are ten principles
behind this strategy.
Set Goals for Paying off Debt
- Brace Yourself for Murphy’s Law When Paying Off Debt
- More Month At the End of the Month than Money for Paying Off Debt
- Track Credit and Credit Card Purchases for Paying Off Debt
- Plan a Fiscal Year for Paying Off Debt
- Work Together with Your Family for Paying Off Debt
- Decide what Specific Financial Goals You Want to Reach
- Think About Long-Term Goals Like Retirement. Also, Decide What to Achieve in the Next Few Years, What to Accomplish This Year, and What You Can Do in the Next Month
- Write These All Down, Rank Them by Importance, and Assign Due Dates
- Next, Estimate How Much You Must Save to Meet Each Goal for Paying Off Debt
- Figure How Much to Put Aside Each Week to Reach Your Total Savings Goal, and Then Write Down Specifically How You'll Make That Happen
Murphy's Law Factor
Murphy’s Law states,
“Anything that can go wrong, will go wrong,” so take the total expenses and increase by 10 percent.
Open an extra account at
your bank or credit union to save money for emergencies such as car repair or a
layoff.
If you can, accumulate
about three months’ worth of take-home pay.
The fact that you are
reading this blog may mean that you are also looking for income solutions.
If that is the case, then
I recommend starting a blog and monetizing it.
If your income is below the national poverty level, that means you must end the monthly mistakes that
are sabotaging your budget.
Your budget worksheet
coordinates your monthly bills and expenses with your take-home pay.
However, there’s probably no
such thing as an average month (considering Murphy’s Law), so outline each
month individually.
Be sure to include planned
savings for your three months take-home pay, and treat it like a required
expense.
Don’t get ambushed by high
credit card bills.
Every time you use a
credit card, write down the date, what you bought, and the amount charged.
If you use several credit
cards, keep separate budget worksheets or columns for each one.
What is a fiscal year?
Instead of a calendar year
from January to December, a fiscal year means financial year or budget year.
It is a period used for
calculating annual financial statements.
However, for your purpose
of paying off debt, you will lay out a yearly budget of planned expenses that
aren’t part of your regular monthly bills, such as new glasses or contact
lenses, firewood, homeowners insurance premiums, vacations, etc.
Review a previous year’s
spending for similar expenses and estimate what costs are likely to be this
year.
Decide where you might cut
back, then total the remainder and divide by twelve.
Now, you can see how much
to put aside monthly for these expenses.
Make budgeting a family
affair.
By sharing the
information, you also share the burden.
Tired of the debt
lifestyle?
Thanks for reading. Please leave a comment and share this post.
