Do you know how much you actually spend each week?
A money diary is the starting point for creating a budget to help you get yourself out of debt. You need to itemise exactly where you spend your money over a certain period; you then decide what goes and what stays - you’d be surprised how the cost of that daily double espresso really adds up.
Once you know where your money is going, you can then start to make changes to the way you spend based on what you can afford, working on the age old principle of “living within your means’, and that doesn't mean relying on your credit card or overdraft to get by every month.
The second step then is to create a budget.
You need to plan goals into your budget. These can be a future holiday, a new car, extra money for Christmas or even just having three months budget saved up for emergencies.
Goals must be SMART – Specific, Measurable, Achievable, Realistic, and Time set. A goal needs to be something specific – a certain amount. How much do you need to achieve your goal? You need to be able to measure the goal – how far have you got to go? Are you half way yet? Are you on target to achieve it in time?
Your budget needs to be realistic – based on your actual spending, not just what you think you ought to be spending your money on. If your goal is to repay your debt, then that’s where the surplus needs to go first, but in a controlled way. If you have more than one person or organisation you owe money to, then paying something to each of them may be the best way to go, rather than paying the person that shouts the loudest.
Remember - think SMART!
Simply Budget is a bespoke budgeting service that has been going since 2008. It is now part of the Debtfix organisation, but has some great tools and advice on its website.
Check it out by clicking on the link below, if you think budgeting is the answer to your debt worries, or just contact us direct.