|
Do you feel like there is very little money left at the end of the month to spread around? Does the concept of a savings account seem impossible? This frustration is often what leads people away from the concept of budgeting. Worse than that, frustration can lead you down the road toward excessive spending, where you can end up thinking, I'll never get ahead, so I may as well charge. From there, it is easy to lose all awareness as to what you are spending against what you are making. Before you get to this point, it is important you utilize the principles of debt consolidation to get your budget and your life in order. When you turn to debt consolidation, you package your debt into one lump sum and then agree to uphold a payment schedule in exchange for a reduced rate that makes fulfilling your financial commitments more affordable and faster to pay off. Debt consolidation can melt the stress off by reducing many payments into one, and it is this principle you want to use in the creation of a budget. Say you have a weekly net income of $800. With 52 weeks in a year, that equals $41,600 per year in take-home pay. Divide that by 12 months, and you know immediately that your monthly budget is approximately $3,466. Now figure out the totals on anything for which you must make a monthly payment, and do not forget to factor in the vitals, such as car gas and groceries. For the sake of an example, let's say your budget looks like this: 1. Rent: $500 2. Electric: $100 3. Phone, Internet, and Cable: $150 4. Car/life Insurance: $140 5. Personal loan: $160 6. Car payment: $250 7. Gas: $150 8. Groceries: $250 9. Credit Card #1: $4,000 at 18% interest ($720) 10. Credit Card #2: $4,000 at 10% interest ($400) At these prices, the grand total in recurring monthly expenses would be around $2,820. Subtract that number from your original take-home pay, and you will see your budget has a discretionary income of $646, which is around $149 per week or a little over $21 per day for recreation and/or unexpected expenses. By collecting your debt and coming up with one number, you develop awareness of your financial capabilities. If you are single and similar to the situation above, you may be satisfied with where you are, and therefore, are not concerned with actually doing a debt consolidation. However, thanks to the principle of simplification found in the consolidation process, you are now in a position to achieve financial freedom. Now let's say you wish to consolidate your two credit cards into one more affordable monthly payment. Your debt consolidation company negotiates 13% and 5% rates for an average of 9%, as opposed to the 14% average you were paying before. This reduces your monthly payment from $1,120 per month to $720, a savings of $400 per month, which you can add to the difference of your original number. While actual debt consolidation may not be helpful to everyone, the principle of it can help you become more aware of where your money is going, and can lead to an understanding that puts you in control of your budget. Greg McGrath of Debt Control has been helping Australians with Debt Consolidation for the past 22 years. Contact us today to free yourself from debt.
Related Articles -
Debt Consolidation,
| 
