Alright, so you have stumbled across how to get debt free and are likely wondering how on earth to get out from beneath a pile of debt. This problem plagues many people but the answer is much easier than the actions. Even though it is difficult to become debt free, it CAN be done and I will show you how to get there.
The first major step in becoming debt free is in knowing where you are financially. Knowing where you are financially means you MUST draw up a budget. Creating a financial budget is EXTREMELY important to your success. In order to get debt free you need to know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must account for expenses that are certain to occur annually, such as vehicle registrations.
What do you put in a budget? I'll show you what a typical expense budget might look like for the average American.
Rent/Mortgage - $1000
Auto Insurance - $125
Auto Loan - $405
Auto Loan #2 - $305
Life Insurance - $66
Water - $39
Electricity - $80
Garbage - $19
Natural Gas - $119
Childcare - $505+
Gasoline - $295
Groceries - $995
Telephone - $41
Cable - $50
Internet - $51
Cell Phone - $101
Credit Card - $101
Student Loans - $100+
Total - $4385++
When we start looking at the financial budget above, each item taken individually doesn't seem like too bad an idea. But together things begin to spiral out of hand. In the above example financial budget we see nearly $4400 of monthly expenses, AFTER taxes. For us to be able to BREAK EVEN on this type of budget we MUST be raking in approximately $70,000 per year. This budget doesn't even include things such as children's doctor's visits, and all the other annual crap we haven't even addressed yet, like enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost a ton of money. It's no wonder people are up to their eyeballs in debt. Most people don't make $70K,$70,000 and most people have all kinds of off the wall expenditures that aren't accounted for on the above financial budget. In order to know where you can cut back, you must know where you stand.
My assignment to you people out there going over this is to do this very first step. Make a budget and BE HONEST - it will do you no good if it isn't right. As soon as we get this done we will be talking about such things as debt equity and discretionary spending. Let us get our budgets prepared so we can begin working on a plan to BECOME DEBT FREE!!!
The first major step in becoming debt free is in knowing where you are financially. Knowing where you are financially means you MUST draw up a budget. Creating a financial budget is EXTREMELY important to your success. In order to get debt free you need to know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must account for expenses that are certain to occur annually, such as vehicle registrations.
What do you put in a budget? I'll show you what a typical expense budget might look like for the average American.
Rent/Mortgage - $1000
Auto Insurance - $125
Auto Loan - $405
Auto Loan #2 - $305
Life Insurance - $66
Water - $39
Electricity - $80
Garbage - $19
Natural Gas - $119
Childcare - $505+
Gasoline - $295
Groceries - $995
Telephone - $41
Cable - $50
Internet - $51
Cell Phone - $101
Credit Card - $101
Student Loans - $100+
Total - $4385++
When we start looking at the financial budget above, each item taken individually doesn't seem like too bad an idea. But together things begin to spiral out of hand. In the above example financial budget we see nearly $4400 of monthly expenses, AFTER taxes. For us to be able to BREAK EVEN on this type of budget we MUST be raking in approximately $70,000 per year. This budget doesn't even include things such as children's doctor's visits, and all the other annual crap we haven't even addressed yet, like enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost a ton of money. It's no wonder people are up to their eyeballs in debt. Most people don't make $70K,$70,000 and most people have all kinds of off the wall expenditures that aren't accounted for on the above financial budget. In order to know where you can cut back, you must know where you stand.
My assignment to you people out there going over this is to do this very first step. Make a budget and BE HONEST - it will do you no good if it isn't right. As soon as we get this done we will be talking about such things as debt equity and discretionary spending. Let us get our budgets prepared so we can begin working on a plan to BECOME DEBT FREE!!!
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