july 01, 2009 03:51am

Setting up a budget

The first step in taking control of your debts is to set up a household budget. You need determine how much you have coming in and how much you spend every month. Once you have it all written down, you can look for necessities, luxuries, and waste.

Necessities are unavoidable expenses. Luxuries are things that are nice to have, but can be lived without, and waste is things that you're paying for but don't use. When times are tough, you'll want to limit luxuries, and you'll always want to eliminate waste. None of that is possible with seeing it on paper first.

Sticking to your budget may only save a few dollars per week, but even a small amount adds up to a lot over the course of a year. And having that savings to draw on in an emergency will reduce a person's dependence on credit.


You can find a good method for determining your budget here.

Posted By: financira