Does this weekly scenario sound familiar? You receive your weekly paycheck and barely have time to enjoy the feel of the paper in your hand before it is flying out the door. You try to pay your bills on time, repay your debts and put food on the table, but sometimes your income does not cover everything. You work hard for your family but feel so discouraged because you do not have anything to show for your hard work.
In addition to your household bills, you also have debt. You owe a mortgage payment on your house and have several credit card bills, unpaid medical bills and a car loan. You wonder how you will ever get out of debt since you can barely keep up with your monthly bills.
In an attempt to save your family from bankruptcy, learn how to create a spending plan. By organizing and tracking your family’s monthly income and expenses, you can ensure that you always have enough money to pay your basic bills. You can also start paying off your debts and look forward to the freedom you will find when you are free from debt.
Get Started With Your Spending Plan
Creating a spending plan starts by taking an honest look at your household finances. Together with your spouse, gather the paperwork that details your income, expenses and debts. With this paperwork, you create a written, flexible plan that works for your family’s lifestyle and needs.
Write down your monthly income from employment and other reliable sources. Occasional income from side jobs is unpredictable, so do not include it when calculating income for your spending plan.
In addition to your mortgage, calculate your average monthly payments for utilities, groceries and home repairs. Include expenses related to your vehicle, like gas, insurance and maintenance costs. Other spending categories include real estate taxes, home insurance, minimum debt repayment as well as clothing and entertainment expenses.
Certain expenses like taxes or insurance do not occur monthly. For these irregular expenses, calculate how much you would need to save each month in order to be able to pay the full amount when the bill is due. As an example, you would need to save $100 a month to pay your $1,200 annual tax payment.
Be completely honest with your expenses. Include everything you can think of, even magazine subscriptions or regular overage charges on your cell phone for the latest Angry Birds game. By calculating all your expenses into a spending plan, you create an accurate, workable plan that honestly assesses your family’s monthly finances
Find the Surplus
After you subtract your expenses from your income, you have a set amount of money you can apply toward debt repayment or emergencies. In the midst of this process, you may discover several expenses you do not really need. Ask yourself if you need to buy a $4 latte every day and if you can eat at home more often. You may also save money and find affordable clothing for your entire family when you shop at secondhand stores. Every dollar you save allows you to increase you savings, decrease your expenses and set more money aside for debt repayment.
Of course, there are months when you have higher expenses and you need extra money, especially around the holidays or when your car needs to be inspected or serviced. With your spending plan, you can be flexible. At the beginning of each month, hold a business meeting. Look at your estimated expenses for the upcoming month, and adjust your spending to cover the extra expenses.
For example, choose to eat at home instead of eating out, and do not buy new clothing in the month when your annual insurance premium is due. With the money you save by adjusting your spending plan, you can afford to pay cash for the additional expenses. It will take some sacrifices for a few months but the rewards of being debt free are greater than the costs.
In addition to creating a workable spending plan, contact us for a free debt analysis. Find help settling debts, lowering your financial obligations and applying more money toward your monthly living expenses. Call us today with no obligation. Fill out the free online form today. With our debt help, you can take charge of your finances and find financial freedom.