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You’ll agree that making a budget list is very difficult especially when you have debts waiting to be paid. I faced this problem for 2 years. Making a budget is not difficult, the difficult part is following that budget.

Over the past 2 years, I’ll say I made more than 50 budget lists but you know what? I followed none of them and this would get me into more and more debts. Do you have a similar case? If yes, I’ve got you. I’m going to help you make a simple monthly budget template that will be easier to follow.

How Do You Make a Simple Budget to Pay My Debts?

  1. Let’s get this straight. A budget can help you pay your debts quickly but this is not going to happen overnight. You’ll need to be patient and persistent to achieve your goal. So, how do you start a budget if you are already behind?

#1 Consolidate Your Debts

If you have multiple debts, try consolidating them or combining them to repay them with low-interest bad credit loans guaranteed approval. This will make it easier to calculate the total interest required and determine the repayment period.

#2 Evaluate Your Needs

Earlier, I talked about vacations and drinking. Those can be categorized as luxuries that are not mandatory. What about the mandatory needs?

For instance, food. We all need to eat, right? Personally, food is something I cannot miss. I love eating!!! But, how many times do you cook? Are you the type who loves eating out? It’s time to change that. Cooking your meals is much cheaper than eating out not to mention that it’s also healthier.

What about clothing? You don’t need to buy new cloth or shoes every week. Try to redefine what you need and the amount you need. Don’t buy too much food that would lead to others going to waste.

#3 Commit to Paying Down Your Debt

Once you get some extra amounts from the above options, it’s a good idea to pay your debts first before saving. But life has its ups and downs and sometimes emergencies do happen.

“Since we all need an emergency fund, it is wise to divide your income with most going to debt payments and small amounts going to savings” Carrie Rad, a Financial Advisor urges.

The money you allocated to paying down your debts and for emergency funds, try to divide it such that most will go to paying your debt and a small amount left for savings.

#4 Use Budgeting Tools and Apps

Budgeting apps give you an idea of what is going on in the world of your finances. They show when certain bills are due, your credit score and how you spend your money. They can help identify areas where you are spending most of your money by tracking your monthly spending. These apps can help you save.

#5 Get Inspired

Having a clear motivation to get out of debt is essential. You can even plan for a treat like a vacation once the debt is over. If your goal for making a budget is to increase savings to buy a house or a car, get someone with the same motive and do this thing together. Two is always better than one.

#6 Live Your Life

I’m sorry, what? I know that’s what you are probably asking yourself. But let me ask you a question. Are you the kind of person who cannot pass near a shopping mall without buying anything unplanned? How many times do you go out for parties and vacations? Do you drink too much? These questions can help you find where your money is going.

You are still in debt and to get out of it, you’ll need to make some changes. Avoid buying things at random and cut down on parties, vacations, and drinking too much. In short, don’t overspend your money to please others. You’ll be amazed at how much money you’ll save to pay down your debts.

How Do I Create a Monthly Personal Budget?

Consider using the 50/30/20 rule. That is:

50% of your total income should go to essential expenses like rent, water bills, electricity bills, food, school fees, and more.
30% should go to your wants. For instance, clothing.
20% should go to savings and debt payments. A large percentage should be used to pay down the debts first.

Benefits of Having a Budget Even If You Have Debts

#1 The Best Option to Clear Your Debts

Well, a budget is not going to make money to clear the debts. That will come from your job. But the budget will help you utilize your income well. With limited expenditure comes extra money to clear up your debts.

#2 Acts as a Motivation

When you start saving, you’ll need to sacrifice some expenses. For instance, you’ll have to limit your vacations or parties for a moment. The fewer vacations and parties you attend, the more money you raise and the more debt you clear.

The goal may not necessarily be debt clearance. You can create a budget to increase your savings to buy that gorgeous watch or cool Nike shoes you saw. It could also be to buy a house or a car.

#3 Gets You Out of Future Debts

As you are reading this article, you might be in debt already. I mean that’s why you want to find ways of making a great budget to get out of the debts. Still, if you are not in debt, there are potential risks of getting into future debts if you don’t create a personal budget worksheet.

One study from Experian showed that on average, the number of credit cards per household was $5,525 in 2021. Yep, that’s right. A budget will “force” you to change your spending habits to avoid using the money you don’t have.

Conclusion

Creating a budget is essential. Not only will it get you out of debt, but also increase your savings for emergency funds, help you control your money, and most importantly help you in the future during the retirement period.

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