When debt becomes too much to handle, it can feel like you’re sinking into quicksand. But there’s no need to panic! With a little knowledge and effort, you can get out of debt and start rebuilding your finances. One of the best ways for people to become more responsible with their money is by drawing up a budget. Here are some tips on how to do this:
1. Draw a budget
First things first: you’ll need to draw up a budget. This will help you calculate how much you can afford to spend on debt repayments and other financial obligations, but it also gives an overview of what your income is coming in and going out each month.
Here’s how:
- Calculate your total income for the month. Add up all sources of money that come in every month (including any investments or savings accounts that you have). Then add any one-off payments like tax refunds or Christmas bonuses into this total as well.
- Categorise the different expenses that need to be paid on a monthly basis from this figure, including rent/mortgage payments; food costs; utility bills; entertainment costs etc., so long as these are regular and consistent with most people’s lives (i.e., don’t include very rare expenses).
- Add up these categories together and multiply them by 12 (the number of months in a year)
The best way to get out of debt is simply to not get into it. But if you already have a pile of debt, there are several things you can do to manage it and get out of debt as quickly as possible.
First, draw up a budget. Calculate your total income and expenses, so you know how much money you have left to pay off your debts after your living expenses and other monthly costs have been paid. If these numbers differ from one another, consider making some changes in spending habits or looking for ways to bring in more cash (for example by selling items on sites like Gumtree).
Conclusion
Now that you know the basics of how to get out of debt, it’s time for action. Take some time over the next few days and weeks to sit down with your budget and see where you can make cuts so that you have more money left over each month towards repaying your debt. If there are any expenses that aren’t necessary and could be cut back on instead, consider doing so now while they’re still small enough to do so without too much trouble!
