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HomeBlog BlogBudgeting – The 7th Way To Get Out Of Debt
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Budgeting – The 7th Way To Get Out Of Debt

November 4, 2012 by National Debt Relief

budgeting money to conquer debtDid you know some experts say there is good debt and bad debt? Good debt is debt used to buy something like a house that will appreciate in value or an automobile that can be used in your job. On the other hand, bad debt is debt that was used to buy an item that will depreciate in value or that has inherent value – like a flat screen TV.

If you have debt that’s spun out of control, there are basically seven ways to deal with it. They are:

• Cut deals with your creditors
• Borrow money to pay off high interest debts
• Consumer credit counseling
• Bankruptcy
• Debt Consolidation
• Balance transfer
• Budgeting

The only “instant” solution

The only way you can get rid of unsecured debts such as credit card debt quickly is by filing for a chapter 7 bankruptcy. You can find lawyers who will handle a bankruptcy for $500 or less and, in most cases, it will get you free from most of your debts in six months or less. Five of the other options won’t eliminate your debts. They’re just ways to move your debts from one set of creditors to another.

Budgeting

The seventh way to manage debt is budgeting. It will take time and some self-discipline but it’s the only way to totally eliminate debt without having to borrow more money and without ruining your credit for 10 years as would happen if your filed for bankruptcy. If you have the right attitude, budgeting can actually feel good as you see yourself getting closer and closer to your goal of becoming debt free.

Getting started

The first step in creating a budget is to determine your current monthly spending and then compare it to your income. You will probably have to track your expenses for a month to learn how much you’re spending in such categories as food, transportation, housing, clothing, utilities, insurance, leisure and entertainment, education and so forth.

Compare this with your monthly income

Step two is to subtract your monthly income from your total spending. This will tell you how much you need to reduce your spending to stop piling up debts and start paying them down. Suppose for example that your monthly income (after withholding) is $2000 but you’ve discovered you’re spending $2,500 a month. In this case you would need to trim your spending to around $1,800 to cover your monthly expenses and have $200 left over to pay down your existing debts.

Where to cut?

Now, go back to your list of monthly spending categories and review each one to see where you might make cuts. There are no hard and fast answers to this but there are “soft” categories where you should be able to reduce your spending. These usually are ones like entertainment, clothing and food. I call them soft because it’s often possible to make cuts in them vs. “hard” categories such as housing, insurance, utilities and etc., which are pretty fixed.

Don’t make yourself crazy

One mistake some people make in creating a budget it so make one so restrictive they go crazy trying to stick with it. You should leave some room for entertainment or for the occasional impulse purchase. If you don’t you could find you’re constantly failing to stay within your budgeted categories and end up just jettisoning the whole thing.

Stick to that budget

Of course, the hard part is sticking to that budget. One good tool that can help is to put everything on a spreadsheet so you can see that you’re staying within your budgeted categories and that, most important, that you’re making good progress on your goal of becoming debt free.

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National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Easy National Debt Relief Caller: Misty Transcribed WE 1/17/2021 Misty: The call may be recorded. How did you hear about National Debt Relief? JEANETTE: I just went online looking. Misty: Was there any specific financial concerns that led you to seeking out their services? JEANETTE: Yes. I just got in over my head with credit cards and I couldn't save enough for my taxes. Misty: How was your interaction with your representative that you worked with? Was it a positive experience? JEANETTE: Yes, it was a positive experience. Misty: Would you say working with NDR has affected your daily life? JEANETTE: Well, it has taken a little worry off. I'm still tensed about it, but it has helped. Yes. And definitely, now, I can put the money aside each month for my state taxes. Misty: What are your thoughts on the cost in relation to the quality of service? JEANETTE: Well, so far, so good. That’s all I know to say. [Chuckles] Misty: That brings us to the star rating. And it's a scale of 1 to 5, 1 is very dissatisfied, and 5 is that you would recommend them to a friend. JEANETTE: 5. Misty: Are there any other comments or even any suggestions on how they might improve their service for you? JEANETTE: I haven't really thought of any recently. So far, I'm pretty happy. Misty: Would it be all right if we shared some of your review content and your star rating on the ConsumerAffairs.com website? That way, if anyone is thinking about using NDR, they can read reviews of people that have done business with them. JEANETTE: Okay. Misty: Just to let you know, it's first name only. We never use last names and don't publish private information. JEANETTE: Okay. Good. Misty: Would you like me to email you the review when it's ready so you can update it if you'd like? JEANETTE: Yes, please. Misty: Okay. Let me make sure I have the correct email address. I have jetta116thst84@yahoo.com. JEANETTE: That’s right.

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Jeanette Cook
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