If you need some debt help and are looking to put your debt worries behind you this year, you might be surprised that a budget can be the answer.
Yes, there are a lot of free debt calculators and debt planning tools on the Internet today.
There are debt related blogs and all sorts of books in your local bookstore that have tips for getting out of debt. These are important, but you'll find no other tool that will help you make changes faster than a spending plan, or budget.
A budget can help you get out of debt for 3 reasons:
1. A Budget Helps You Manage Your Spending
This sounds personal finance 101ish,and it is a bit, but it's a simple truth many people don't care to embrace. If you're managing your spending you're not spending money on little items that can empty your wallet each week. The trips to the local coffee store, or the temptation often found at the grocery store for what you think are need related items can be diminished with a well established spending plan.
Let me elaborate further. You identify 2 categories of spending that often cause you problems each month: entertainment/dining out and groceries. You set spending limits on those areas and also choose to use cash for such purchases (you use your debt card for other purchases). Those two steps right there have already caused you to be more concious about your spending. Now, as you eat out and enjoy yourself, or stroll through the grocery store, you're conscious of how much money you have available and choose to pass up either items that aren't needed or eating out when you don't have much money left.
The extra money you have by managing your spending is available to pay on debt. Better yet, you've avoided overspending in tough areas to manage and no longer spend ahead on a credit card.
2. A Budget Helps You Find Money You Never Knew You Had
As a Crown Money Map Coach, I've had countless individuals and couples visit with me because they are deep in debt, need debt help and don't think they have any money. But once I sit down with them and help them create a budget, many of them find they have a surplus at the end of the month that can be used to get out of debt. Seriously? Yes, many times it's a matter of becoming aware of what's coming in and what's going out that helps people see the light at the end of the tunnel.
Allow me to elaborate further again. One of my favorite budget planning tools is from Crown Financial Ministries. It's a simple spending plan worksheet that allows you to estimate your monthly expenses. It's a great tool for identifying expenses people typically forget each month. Such expenses are often surprises and end up getting managed with credit cards. We all know where this ends up going.
So, spending some time to walk through the spending plan may help you realize you may have as much as a few extra hundred dollars at the end of each month that often gets absorbed with everyday spending. This money can be used to help you get out of debt!
3. A Budget Helps You Have Peace Of Mind
This third point is less practical, but it's important. Those who are in debt to the point of needing help are often in a state of anxiety and worry. Anxiety and worry are increased when you don't have a plan and you know you're not making forward progress. A budget is your plan.
So, here's why I like it and why it can bring you peace. A financial steward is someone who is trying to manage God's resources wisely. It doesn't matter your past. It only matters what you're doing today. So, I truly believe that if you create a spending plan and manage by it each month, you'll find peace in that you're doing your best to be a good steward of God's resources.
Your budget should include a category for debt reduction. Determine what extra amount of money you'll able to use towards paying off your debt and pay it consistently each month. Regain some peace of mind in knowing you're doing your best to manage your way to debt free day!
Do you have a budget or spending plan? Do you believe having one is essential in getting out of debt?