How To Create A Personal Budget And Spend Money On Purpose

A good personal budget plan and hard work lead to prosperity when you prioritize expenses.

Expenses come in several forms:

Fixed expenses that occur every month at the same amount, such as mortgage, rent, car payment, insurance

Variable expenses that occur regularly, but are subject to fluctuation, such as groceries, gas, utilities

Discretionary expenses that determine your particular lifestyle, such as clothing entertainment and vacations.

After you have looked at current receipts and determined your total expenses each month, compare that to your total income.

If your balance is in the red, you will have no money to set aside for reserves ready for future emergencies, and no preparation for retirement or college for your children.

Perhaps you are like most single moms who, when they hear the word "personal budget," imagine all sorts of constraints and end to the good life.

However, a personal budget is not an arbitrary set of prohibitions; a budget is simply a personal plan, your plan, which leads to prosperity.

It's your own personal road map that tells you exactly where your money is going.

Again, this is your personal budget.

If you love to order take out pizza, put it in your personal budget.

If you like going out to Burger King with your kids, put it in your personal budget.

A personal budget doesn't mean you stop doing the things you love.

A personal budget means that you are now spending your money on purpose, and you've chosen how you are going to spend it.

The Process of Arriving at Your Personal Budget Plan is a Relatively Simple One

Plan your personal budget and work your plan by using the budget worksheet you created to develop your own plan.

This is a simple way to project your monthly expenses and compare that projection to the reality of your income.

If you are spending all you earn, the inevitable result of your lifestyle will be debt.

Remember, when calculating your total income to include all current sources:  Salaries, bonuses, interest, alimony, royalties, rents, cash gifts, social security, etc.

Now, subtract your expenses, your "out go," from your income.

Is Your Personal Budget in the Red or Black?

The previous simple math step will reveal if your plan is operating in the red or has positive cash flow.

If this is the case, go back to your expenses and rework your personal budget.

You must find a way to either increase your income or decrease your expenses.

Once you've determined your plan, or personal budget, employ a method of dividing your money into your pre-determined accounts.

Some single mothers use envelopes; some go online and use an electronic envelope system.

Whether it's an accordion file or a well-disciplined checkbook, use some form of accountability and organize your personal budget.

Now that you know how to create a personal budget and spend your money, support your decisions and follow through.

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A Quick Way To Deal With Credit Card Debt

Find Funds to Pay off Credit Card Debt

Contrary to what many people hope, credit card debt doesn’t go away without effort.

And, winning the lottery isn’t a solution you can count on to pay off credit card debt.

So, what should you do when you fall behind and debt threatens your financial health?

First, let your lender know you’re having problems paying off credit card debt.

If you’ve been reliable in the past, they usually understand a temporary setback.

The first thing, of course, is to change your spending habits.

Discipline yourself to give up unnecessary expenses so you’ll have funds to pay off your credit card debt.

Then, go to work to get your head back above water.

• Sell off investments. If you catch it soon enough, you may be able to cash in some of your assets and pay off credit card debt before it gets the best of you.

• Rearrange your debt by paying it off with a home equity loan, which I personally don't recommend because that would be borrowing your own money. However, you’ll lower your overall monthly payments because the interest rate on a home equity loan will be lower than interest on credit card debt, and you’ll reduce your tax bill since the interest on a home equity loan is tax deductible. 

• Create extra income. I suggest you find ways, from part-time to full-time work or start an online business such as a niche blog, to earn additional money and use it exclusively to pay off your credit card debt.

File Bankruptcy to Eliminate Credit Card Debt as the Last Resort

Bankruptcy is not pleasant, and it takes years to get your credit rating back, but it will get you out of credit card debt.

Get Credit Counseling to Get Credit Card Debt Relief

Bankruptcy is normally sought only when your credit card debt exceeds your annual income and is multiplying faster than you expect your income to grow.

Credit counselors provide credit education, counseling, and help you get better terms with your lenders.

This is a proven resource that I have personally used.

In severe cases of credit card debt, they can set you up on a Debt Management Plan, which you pay them monthly and they distribute the funds to your creditors.

With a few exceptions, personal bankruptcy basically takes all you own, applies it to your credit card debt, and lets you off the hook for what’s left.

Consider bankruptcy to eliminate credit card debt if your creditors sue.

If you need outside help, I also recommend contacting the National Foundation for Credit Counseling at www.nfcc.org.

Tired of the debt lifestyle?

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