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Trying to pay off debt? Stick to a budget or consider a debt management plan from a nonprofit
11/24/2009
When dealing with trying to pay off debt, one of the main things people can do to work toward financial freedom is to set up a budget and if needed consider a debt management program.
A recent article from MyOptumHealth.com noted that setting up a spending plan through a budget can help people deal with expenses, such as credit card debt. In order to do so, people need to sit down and figure out exactly how much they are spending every month and compare it to their income.
In setting up a budget, the article noted consumers should make sure to divide their expenses into three categories: fixed, flexible and periodic. Fixed expenses stay the same every month, and include things like rent or mortgage. Flexible expenses happen every month but can come in at different amounts, including things like food and utilities. Finally, periodic expenses encompass things like car repairs and visits to the doctor.
Once a person figures out how much they spend and compares it to how much they earn, they should see where they can trim expenses in order to meet their incomes.
Of course, it may turn out that consumers still can't keep up with their bills - in which case, they may consider speaking with a nonprofit credit counselor who can assist with a budget and evaluate the need for a professional debt management plan. They may also consider a debt consolidation loan, which brings loan payments together in one bill, often times at a lower rate.
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