How To Budget the Right Way

Written by on September 28, 2012 in Money - No comments | Print this page

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Surprises are nice for birthdays, but they are shockingly unpleasant when they occur in your finances. You can avoid them by taking an honest look at your income and your expenses. The best way to live within your means is to create a budget.

For your budget to have any chance of helping you manage your finances, it must include every one of your expenditures. To set it up, you need to put each of your expenditures into one of three categories:

• must have
• nice to have
• not necessary

Food and rent or mortgage payments are obvious necessities, and other expenses fall into place as you go examine them.

If you are think that it is too late to plan a budget when you are in debt, you are incorrect. You do have a way to get a fresh start in setting up a plan to manage your debt. Two options that you can consider are debt consolidation and debt relief. The factors that usually favor one option over the other include these:

• status of your finances
• amount that you owe
• age of delinquency on your accounts

Debt Settlement

Debt settlement is a form of debt relief that lets you negotiate with your creditors to pay them less than you owe them. You may wonder why creditors agree to such an arrangement when it means that they do not get the full amount that you owe. Some of their decisions are based on experiences that they have had with others in your situation.

Some of your creditors probably think that you are going to declare bankruptcy, and they prefer to get something instead of nothing. You may get a deal that lets you pay from 40-60 percent of your debt. The problem that you face then is that it is usually required in one payment. To guide you through the process, knowledgeable debt relief counselors can help you find the best solution to your dilemma.

Debt Consolidation

Debt consolidation is not the same as debt settlement. The main difference is that you intend to pay your creditors what you owe them, but you need some help to get to that point. One path that gives you the ability to pay off old debts is a loan.

When you go through debt consolidation with a reliable company, you can arrange to make one monthly payment for all of your unsecured debt. You do not have to make a separate payment on each of your credit cards, student loans or any other unsecured debt. You avoid multiple interest charges this way. Your home mortgage is backed by assets, so you cannot include it as an unsecured debt.

You have a chance to take control of your finances with the options that are available. The passage of time tends to make financial problems more serious. Take a look at Facebook or Twitter to get some testimonials on companies that can help you get out of debt. Help is available to you if you just ask for it.

This is a guest post.  Finances are a part of everyday life, John Surpass provides this great post. When it comes to finances, he recommends Credit Counseling Services of Atlantic Canada, which provides excellent service in credit card debt and debt relief Newfoundland

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