How to make a Budget for you and your Family…

Aug. 18, 2010 - PRLog -- Andover, Massachusetts August 18th, 2010 – Stuck in debt? Always wondering how you ended up in the financial situation you are in? If you answered yes to these questions then most likely you do not have a budget for yourself. A budget is the foundation from which all your other financial decisions are based on. If you have the will power to follow your own budget then there is no reason why you can’t live a happy and debt free life. But, as this recession has shown us, the majority of Americans are not living with a budget and are using credit to finance extravagant lifestyles. Celebrity stories about “millionaires” with thousands in credit card debt are all to obvious reminders that a budget is only as good as the person who devised it. If you can’t follow your budget then it is basically useless. So, follow the steps below to create your personal budget and find a way to stick with it. Maybe you need a mentor or someone with whom you can share the frustrations and limits that a budget imposes on you. Whatever it takes, don’t give up, the hardships and frustrations will be worth it!

The first step in any budget process is an inventory of your income and the average expenses you have each month. Go back and look at a few months worth of utility bills, credit card bills, ATM receipts, etc. to see just how much money you spend on average each month. Compare this to your income and if your number is positive, then move on to step 2, if its negative your expenses need to be cut or your income needs to rise to prevent you from falling further into debt.
Ok, so you’re not spending more than you make so you’re all set right? Wrong! The typical household is neglecting many items every month by just living paycheck to paycheck. Have you thought about retirement saving, emergency funds, college savings, taxes, car expenses etc? These are all items that should be funded each year that will not show up on your credit card bill.
Paying yourself should always be done before the regular bills are paid. This means in an ideal situation that you would be contributing a maximum of 20% of your gross income to retirement savings as well as fully funding a 3-6 month emergency fund. After taking your home and transportation expenses into account your income could already be 80%+ gone.
Ideally, once regular and important expenses are considered you will realize that to really become debt free that your expenses will need to drop each month. Review your regular non essential expenses such as communication, entertainment, clothing, fitness, etc. and see just which services and goods you really do need and which you can downgrade or eliminate entirely.
Becoming debt free is not easy, but creating a budget is. Once you have a plan in place make sure you stick to it. While it may be convenient to forego a few months of retirement saving to go on vacation it isn’t a good idea. You will lose the power of compounding interest in your retirement account which will hurt you when you are getting ready to retire. Instead, save up for every large purchase so you can pay for it in cash without having to dip into other essential areas of your budget. Good Luck!

Readers, do you have a budget? Are you paying yourself first or just surviving at this point? Have you had difficulty following through on your budget?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini
Marketing Coordinator
Certified IAPDA Debt Arbitrator
Preferred Financial Services
stavernini@pfs1.net

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Preferred Financial Services is the leading voice in the debt settlement industry. PFS has worked with hundreds of creditors to help negotiate realistic goals for those drowning credit card debt.