How to create a simple budget plan for debt repayment
A budget plan can easily help you to overcome past debt issues and pay down debt so you can become financially free. There are many ways to accomplish this, but a simple and straight forward budget plan will help make it even easier to manage. These tips for how to create a simple budget plan specifically for debt repayment will help you to get out of debt easier and faster than ever before.
Take a serious look at all expenses.
The best and most simple budget plans begin when you get serious about what you have coming in and going out each month. It’s time to get serious and focus not only on your expenses but also on what you can do to increase your income.
If you see that you are living outside your means no matter how you arrange your budget, it’s time to start downsizing or making major changes. Unfortunately, this can mean a second job for some people. For others it may mean cutting out a gym membership, special events, eating out or even selling the second family car. Whatever you do, you need to look at each and every expense and evaluate the necessity and ability to change it to improve your budget plan for debt repayment.
Make savings a major priority.
A savings account cannot be an option. It has to be a must-have and a priority on your list. For most people, the lack of savings is what has resulted in higher debt. If there was more money in savings, many expenses would not have occurred and would have easily been provided for. A savings account should be set up to create an emergency fund and backup plan should anything happen where you have unexpected expenses.
You can easily set this up by having funds direct deposited out of your paycheck. If you feel there is no room in your budget for savings, look to some of the things mentioned above to eliminate some expenses to create a savings budget. Even if you can only save $25 a week or even a month, this is a great beginning to a savings account that can help save the day when something unexpected occurs.
Set aside 5% toward debt repayment to begin and move upwards.
It seems like a small amount, but if you make $3000 per month that is still $150. That amount can easily be set aside to pay off debt once you’ve assessed your necessary expenses. Over the course of one year, you can pay off $1800 in debt. That is a significant amount for many families.
As you are able, you can increase that monthly percentage in 5% increments. A 15% – 20% debt repayment plan can make a huge difference in no time toward your family being debt free.
Building a functional but simple budget plan is easy. You truly only need to know what your income and expenses are, then work those numbers until you are able to also make room for savings and debt repayment. The difficult part comes in ridding yourself of unnecessary expenses. Because really, that’s not fun, but I’m positive you will feel so happy once you get your debt payments rolling and knocked off!