Question:

Setting up a new certain kind o f budget to get out of debt?

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hi-- I am a middle-aged woman with two teenage daughters. I took on a lot of debt in grad school when I changed professions about 2 1/2 yrs. ago. I have a fairly good job in my new profession, but have high debt: income ratio. I found one of those pay-it-off fast by paying certain amounts to certain debts at a time. It looks good, and I want to try it.

However, I get paid biweekly and it's looking really hard to figure that out; that is, with my regular bills and then these amts. to pay off the debt, which fluctuate a lot from month to month.

Has anybody run into a similar situation, and how did you make it work? Thanks. the site I am trying to use is CNN.money.com. and it looks good if I can figure out this bi-weekly thing. Thanks!

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  1. Budget your income on a monthly basis; monthly income versus monthly expenses.  Some expenses like food and utilities are different each month so budget a conservative (high) amount to ensure they are covered.  Include car insurance and similar expenses that come along once or twice a year and unexpected expenses such as car repair, home repair and medical needs.

    And be sure to include some savings each month for an emergency fund of 3 months expenses.  Don't use credit cards unless you can limit your spending to what's in your budget and pay the entire balance each month.

    Being paid bi-weekly means that twice in the year you will get 3 checks.  The extra money can be used to make additional debt payments.

    God bless!


  2. hello - im trying to find what you are trying to use to see if there is a way to make it easier for you.  i cant find it.  can you email me a link?  thanks.

  3. First of all before you start running in many directions you need to create a spending plan. In writing figure out what the goals are and how you plan to attack them.

    Then create a budget I have tools I can help you with here. When you have created the budget all your discretionary funds should be taken out in cash immediately. You put each amount in its own envelope. Like food,Gas,Personal care (hair cuts, make up etc.), Entertainment (Lunches,dinners,movies,books,magazines etc.) Prescriptions,  When the cash is gone its gone do not dip back into the bank account. You may have to divide this into a twice monthly event.

    The other bills like Rent, car payments, insurance, utilities, need to be written down. Write out the checks for each, mail out everything.  

    Your credit card issue is last to deal with. If there is money left in the first half of the month then start your repayment program. Otherwise wait for the second check of the month.

    Keep your self tight with the discretionary monies this will make or brake you. Don't cheat you only hurt yourself.

    If you need more help contact me and I will give you some tools.

  4. Set up a budget to know exactly how much you can apply to debts. Before you try getting the debt paid off though, stop using credit or the hole will just get deeper. Then use all extra money to set up an emergency fund of $1,000 that way you don't have to use credit if say your tire blows out. You should also look at your expenses and see if there is anything you can cut out or cut down on. Maybe the car payment is too high; sell it and get a cheaper one, or maybe you can cut a cell phone plan or cable bill down.  Here's how I budget:

    Living expenses first-housing, electric, water, groceries, etc.

    Transportation second- car payment, insurance, gas

    Other debts third- credit cards, furniture payments, personal loans, etc.

    Luxuries (evaluate the necessity of these) - cell phone, cable, gym membership

    After you plug in all the numbers: Income minus all these obligations figure out the amount extra you have to apply to the debts. There are two basic ways to do this paying off the one with highest interest first or the "debt-snowball" I like the debt-snowball best because it is very motivational.

    What  you do is gather all debts. Line them up from smallest to largest. Pay the minimum on all debts except the smallest. On this one pay every extra penny you have until it is all gone. Then you move to the second smallest and take the minimum payment from the first plus every extra penny to that one till it's gone. Then add the minimums from the first two and all extra to the third and so on until you are debt-free. If you really stick with it you will be debt free in a relatively short time. Look up Dave Ramsey for more tips. He is great at finding solutions to finances.

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