Strict budgeting

Budgeting is a simple and effective way of controlling your finances to get debt free.

Depending on your level of debt, you may be able to successfully  repay your debt through strict budgeting.  Strict budgeting is the center point any debt repayment program. With any debt repayment program the first step is to always prepare a budget that you can stick to.  There is likely point in preparing a budget unless you strictly stick to it.

The first step in preparing a budget is to estimate your average income over the course of your usual pay period, for example if you are paid weekly then calculate your average weekly income.

The second step in preparing a budget is to document all of your expenses.  This process includes identifying expenditure which you don’t necessarily incur every week or every month.  These types of expenses may be incurred quarterly or annually, like insurances, electricity, car registration and car maintenance etc. It is critical that you identify all of these expenses and make an allowance for them in your weekly or monthly budget.

The third step is to ensure that your average income exceeds your average expenditure.  If your income exceeds your expenditure then that surplus can be used to repay debt. If your expenditure exceeds your income you will need to reduce your expenditure or consider working a second job. Your budget before repaying debt must be in surplus.