A Good Debt Elimination Program Starts With a Budget

Debt is a financial disease that is affecting a vast majority of middle class Americans today. Many find themselves living pay check to pay check each month and wondering where all the money went while their level of debt keeps getting higher and higher. Those who are successful with money have one thing in common; they control where their money goes and how it is spent and they do this by using a budget that tracks every last dollar they make and spend.

If you are one of those people who find yourself in financial hardship then you need to start a debt elimination program that is built around a personal budget. The reason for this is simple, if you know how much income you have and how much your expenses are each month you can make adjustments to your spending habits to bring your spending back into line with how much you make. A budget is the first step to taking responsibility for your financial future and for most people that means eliminating debt.

While creating a budget can be a scary proposition because of what it might show it is a necessary part of any good debt reduction plan. The truth of your spending habits staring back at you from a sheet of paper isn't fun but it is the quickest and easiest way to get started.

By writing down your income in one column and your expenses in another column your financial picture will soon come into focus. Be sure to leave nothing out because you want a complete picture of what your money is doing. Add up both columns to see if your income is keeping up with your spending. If you are like most people who are suffering the effects of overwhelming debt you will find that your expenses are probably much greater then your income and the biggest bulk of this may well be the monthly payments on lines of credit you may have that can include a mortgage, car loan, students loans, and credit card debt.

Because of this you may want to make a separate spreadsheet that lists all your outstanding debts owed to your various creditors. Make a column for each of the following categories; name of creditor, balance owed, interest rate, and interest being paid each month. Add up the numbers in the balance owed and interest being paid columns and write it down at the bottom. This will show not only how much debt you owe in total but also to each individual creditor.

This will allow you to come up with a game plan to start paying back these debts and work your way out of the financial hardships they have caused. Because money can be an emotional issue one of the best ways to stay motivated is to start with your smallest debt and get it paid off first. This will give you a good feeling and keep you moving on to the next highest debt until it is paid off. Keep working your way up until you knock out that biggest debt.

By starting with a budget outlining all your income and expenses your debt elimination program will soon have you back on your financial feet. You will have much greater financial freedom once the heavy weight of all that debt is no longer on your back.