HOW TO REDUCE YOUR DEBT WITH A PROPER BUDGET
Debt consolidation, debt settlement, debt arbitration, credit repair and all other aspects of a true financial re-structuring strategy require active participation from the consumer.
It is not enough to simply close one’s eyes and have blind faith that’s the initial process will correct all aspects of one’s financial shortcomings.
Some credit card debt, high interest loans and merchant accounts can achieve high balances due to unforeseen circumstances such as job loss, economic strife, family emergencies, etc. However, most debt issues are due to lack of financial planning and poor spending habits, whether we wish to admit it to ourselves or not.
Some consumers are fortunate enough to have residential equity and a relatively quick fix is available to re-constitute financial comfort consisting of a mortgage re-financing, debt consolidation, and interest rate reduction with our national team of mortgage brokers. Others may not qualify for such products due to limited equity, lack of home ownership or damaged credit.
We have comprehensive solutions for these consumers as well so hope is not lost and bankruptcy is not inevitable.
In all solutions, future budgeting is integral to the success or one’s progressive financial standing.
We work with our clients to help ensure ongoing success and financial rewards. This process is interactive and will require honest budgeting preparation.
CREATING A BUDGET
This process takes time and honesty with yourself. The more you can accurately determine what you are spending and where it is going, the better you can commit to active changes.
The first step is to determine how much money you spent the previous month and where that money went. Do your best to gather a detailed list of all expenses from your bank statements, credit card bills, household bills, mortgage payments, etc.
BUDGETING: BASIC EXPENSES
You need to now separate your basic expenditures which are necessities, such as your mortgage, groceries, utilities, insurance, etc. Be honest with yourself in determining what is “required” and what is “desired”. We will look into this list later in time to help with this determination and suggest further trimming or advice on how to further reduce payments/interest rates, etc.
You now need to look at all the other expenses that you are left with after eliminating basic expenses. Many consumers are surprised to discover that this can be as high as 30% or more of total expenses. This is the first list that needs to be addressed once our plan is utilized.
BUDGETING: LISTING CREDIT CARDS/CONSUMER DEBTS
Prepare a list of all your current credit card, high interest loans and merchant accounts. List your current balances, monthly payments, available limits, and your interest rates in descending order. We will then address these debts according to interest rate, payment and balance, in that order, and so should the client.
A progressive financial debt solution should not only be focused on debt. Saving money should be a primary concern and you should pay yourself first(it’s easier to do once you have reduced your out of pocket monthly expenses to debt repayment). A realistic debt management plan should see 10% of your after tax earnings being dedicated to a combination of short and long term savings. This will provide for unexpected expenses as well as long term security. This is best accomplished with a fixed amount being withdrawn from your account monthly to a savings vehicle.
I am in the debt consolidation industry, a wonderful world where people looking to save money and improve their financial situation can find the help they need. Whether it be consolidation, debt arbitration, consumer proposals or bankruptcy, we can help. We are located ion Ontario, Canada, so if you are also living here, feel free to contact me to see what your options are. Go to www.forgetthedebt/how-to-reduce-your-debt-with-a-proper-budget, get your FREE REPORT, and I will be in contact with you within 48-72 hours.