Regardless of how you plan to resolve your debt problems there will come a time when you will have to find out exactly how much your household brings in each month and how much goes out each month and to whom.
Most people balk at developing a budget plan; however, you will have to organize your monthly income and expenses on a worksheet if you plan to do any of the following:
(3) Negotiate with creditors for alternate repayment plans and reduced settlements
Even if you don't plan to do any of the above, it is important to get a very clear picture of how your money is being spent each month. Therefore, to discover your true financial condition and get out of debt once and for all you should do the following:
Step 1: Find out where you are spending your money and how much is being wasted each month.
Step 2: Find out how and where you can cut back on expenses in order to free up more money to pay your debts.
Step 3: Decide what action you are going to take (bankruptcy, credit counseling, debt negotiation) based on what you discovered about your finances in Steps 1 and 2 above.
Use our menu at right to discover ways to reduce your monthly expenses and develop a budget. By keeping track of every penny spent for several months you might discover that you can get out of debt on your own without chosing options (1), (2), or (3) above. Some people discover that they are wasting as much as $800 a month that could go towards paying off debt.
A good way to start the process of resolving your debt problems is to find out how seriously in debt you really are. To do this, calculate your debt-to-income ratio. Click here to find out how to calculate your debt ratio.
