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Budgeting: How to take control NOW!

Budgeting is something many people are talking about these days. With the ever-rising cost of living, millions of Americans are struggling to get by. They are using their credit cards to pay for everything from their morning coffee and fast food lunch to utilities and automobile payments. The problem is their credit card debt is becoming insurmountable and consumers are quickly drowning in debt.

Budgeting is not a difficult task; however, it does require taking time to review your household finances and develop a plan. Budgeting also requires self-discipline and a strong desire to get out of debt and stop living paycheck to paycheck.

The first step in developing a household budget requires creating a list of income and expenses. A simple, yet effective way to create a list is to take a piece of paper and draw a line down the middle of the page. On one side list all income received including salaries, commissions, bonuses, alimony, child support, social security or disability income, and financial investments.

On the other side of the paper include all expenses such as rent or mortgage payments, property taxes, homeowners association dues, utilities, automobile payments, home, auto and health insurance, medical expenses including medical co-pays, prescriptions, dental and vision, groceries, credit card payments, student or personal loans, clothing, investments, child support, alimony, and entertainment. Additionally, include federal, state and county taxes which may need to be paid at the end of the year.

Once your budgeting list is created, add up the totals in each section. If your expenses are higher than your income, budgeting can help you determine areas where you can reduce spending. Another trick is to carry a small notepad and record every expense for an entire month. Many people are unaware of where their money is actually going. By tracking the small expenses such as the energy drink and bag of chips you bought on the way to work, you will soon be able to see where you are wasting your hard earned cash.

It is imperative to review every expense and determine if it is truly necessary. If not, find a way to eliminate it as quickly as possible. For example, if you pay someone $50 per week to clean your home, you are spending $2600 per year. Instead of paying someone else to vacuum and dust, wouldn't you rather invest that money for your retirement?

When it comes to budgeting, credit cards are your worst enemy. If you owe $10,000 or more in credit card debt, consider debt consolidation to reduce monthly expenses. Better yet, consider cutting up your credit cards and stop using them altogether. If you aren't able to meet your financial obligations without using credit cards, consider participating in credit counseling.

Budgeting can set you free from the financial chains that bind you. There truly is no need to try to keep up with the Joneses'. Financially overextending yourself will only cause you to dig a deep hole that can take a lifetime to climb out of. Developing a budget that you can adhere to can provide you with peace of mind and help you build a nest egg for your golden years.

If you are having a hard time making ends meet, we invite you to learn more about personal money management, budgeting, debt consolidation, credit counseling and bankruptcy alternatives in our comprehensive article library. If you are facing bankruptcy or foreclosure, contact Simon Volkov today and discover what options are available to place you back on track!

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Published on October 15, 2008 at 04:47 PM

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