Plan for the Future by Eliminating Debt


It is important to examine your debt position on both a short term and a long term basis. Individuals should be able to meet expenses and work towards their goals without accruing excessive debts. Even though you are current on your bill, but are unprepared for the future, then some financial changes need to be made. On the other hand, if you are on track for a comfortable retirement, but is not able to meet your current monthly bills, then change would also be necessary. The best way to get a handle is to develop a budget. It is a great tool that can help you successfully reach your short term and long term financial goals.

Consider these budgeting tips such as determining your actual expenses. This step may take a couple of months to complete, but save receipts and record expenses that occur on a daily basis. This information can be used to accurately establish goals. These would include future purchases, vacations, savings, retirement, etc. Calculate how much it would cost to accomplish these goals. Be sure that you accurately record your income including additional income such as bonuses, money from side jobs, etc.

Keep track of this information on a monthly basis and calculate the amount that you have determined would be necessary to reach your goals and break them into monthly figures. By adding these figures to your actual expenses, you can determine your monthly total. Compare this total to your total income and if you are faced with a deficit, then consider spending cuts.

Be sure to establish totals in each category as it is important to monitor the amounts of each individual expense. This helps to ensure that neither too much nor too little is being put toward each category. In addition, establish a discretionary fund so if you have additional money after all expenses have been met, you can establish a discretionary fund. This fund can be used for things that you want rather than need, but it is important to limit your spending in this area to the funds that are actually available.

Review your budget on a regular basis at least once or twice a year to make sure that everything is still relevant. If factors such as income, expenses, or goals have changed, then the budget may need to be adjusted as well.

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