Determine Where You Can Cut Back In Your Budget
Since we already tackle on the purpose of budgeting, it would be more helpful that you learn how to stick to it and made some modifications when necessary. When speaking of finance management, the word budget is always associated with whether searching for information on the internet or when asking someone with a good disposition towards spending.
Furthermore, Budgeting can be the hardest part in terms of debt payments. It requires discipline towards your spending habits and cutting back on your expenses whether you like it or not. The easy part though is determining where and what to cut back on your budget.
Three Easy Steps To Determine Where to Cut Back
There are three easy steps that will guide you in distinguishing where should you cut back. As you take a look at the budget that you created which comprises your income and expenses, these steps will serve as your pointers which in your list can be omitted or reduced.
The Gut-Wrenching Financial Review
The first thing that you need to consider is analyzing your spending history and attitude. This will include evaluating the amount you spend on groceries, travel, or housing. You have to come up with the percentage of the money you spend on each and compare them to what is suggested by the financial experts:
mortgage/rent, property tax (Housing) – 24%
Personal/Debt Payments/Misc. – 20%
food – 14%
car payments, gas, car insurance (Transportation) – 14%
Savings and Retirement 10%
electricity, water, or cable (Utilities) – 8%
Clothing – 5%
Entertainment and Recreation – 5%
The Must-Haves Challenge
The second step can be done best if you include those who are involved in the budget. It can the entire household as you are creating a spending plan for the household budget. All you need is contemplate on the things that you consider as must-haves. The point is to determine what are the things that you can live without, and those that are not essential.
Some people though might perceive this step as a challenge, as they are unwilling to give up their usual norms or must-haves. This is the reason why the people involved in the spending plan must be on the same page. However, reframing your way of communicating in a manner that will motivate and inspire them can be a way to get them on board.
Considering that you were able to determine the percentage of your expenses and was able to categorize the must-haves, you may sort out your budget by removing the must-haves. This way, you can free up some money which can be utilized in your debt payments or allocated to certain things that are far more significant and urgent.
Though executing your budget might feel restraining you from your liberty in spending your own money, keeping your goal in mind and at heart can make think of the positivities. You may also give it a buffer until you have acquired more stable finance. Thinking what lies ahead when finishing the race, winning the comfort and security of one’s living standard, should be the ultimate priority.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.