Benefits of Creating a Personal Budget

A budget is a spending plan. It is your single best tool for knowing where your money is going and how much you have to work with. Of course, just the mention of the word budget can send even the most structured and organized person running for the hills. A budget, however, has several tremendous benefits. Among them are:

1: A budget makes it easy to save and have extra money. By tracking your expenses and income and controlling how much you spend on variable expenses, you will quite likely find that you have more money than you thought you needed. What are you going to do with that extra money? Of course the experts will tell you to save it and that’s probably a good idea, but maybe you could set aside just a little bit of that extra money to do something fun - like take a vacation or go to that five star restaurant you’ve been anxious to try.

2: A budget saves you time. How long does it take you to collect information at the end of the year for taxes? Even if you don’t do your taxes yourself, gathering all of those financial documents can take days and can be extremely stressful. When you have a budget, all of your expenses and income, including your taxes, are documented. This is particularly the case if you use a spreadsheet program or accounting software.

3: A budget makes it easy to track, and control, your spending. It gives you freedom from the stress of not knowing you have enough money to cover certain expenses. It is so much better to control your finances than to let them control you.

4: A budget can reduce family and personal stress. A family budget creates an environment of teamwork and communication rather than one of stress and blame. Everyone is accountable for the spending decisions made and the financial goals you’re striving towards.

5: A solid budget makes it easy for you to make spending and investment decisions with confidence. Have you ever had the chance to invest in something but you weren’t sure if you could? With a solid budget in place you know exactly where you stand financially and your investment decisions can be made with the right information at your fingertips.

6: Budgets help you plan for the future with ease and confidence. Are you saving for your retirement? If yes, are you saving the right amount or should you be saving more? Are you going to need a new car soon? If you are, will you have the money for it? A budget gives you the ability and the confidence to plan for the future because you know exactly how much money you have to work with right now.

There really is no downside to budgeting. It reduces one of the most significant causes of stress and it puts you in control of your money and your future.

Chapter 7 Versus Chapter 13 Bankruptcy

Is the financial situation in your life such that you need to file for bankruptcy? If so, there are two types of bankruptcy that apply to the individual: Chapter 7 and Chapter 13. They differ in many ways. Learn the details of both before choosing which type of bankruptcy to file for.

Chapter 7 bankruptcy is the one that most people seek to file. When a person files for bankruptcy under Chapter 7, their assets are liquidated to pay what is owed to the creditors. The courts decide on a reasonable amount for payment based on individual circumstances.

All of the assets are not liquidated. Each state has its own policy as to what assets are considered a part of the liquidation equation. You may be allowed to keep your home and car.

In October 2005, the laws concerning Chapter 7 bankruptcy were changed. Now, there are tests that have to be passed in order to file for Chapter 7 bankruptcy. A person’s income must be lower than the determined median income for the state in which they reside. Also, a person must not have the assets available to pay at least twenty-five percent of their debt owed in order to qualify to file under Chapter 7.

Special circumstances have to be demonstrated by the filer in order to override the testing requirements. Special circumstances were extended to victims of Hurricane Katrina so that they could have the chance of a new start after the flooding disaster that destroyed their homes. If the judgment is against filing for Chapter 7 you may appeal, but this involves another trip to the courts and extra expense. If you feel that you need to be heard, it could be worth it.

Chapter 13 bankruptcy involves repayment of the debt owed to creditors. You are given a time frame to pay off your debt and means are developed for you to do so. The assets that you own are not liquidated. The courts look at your finances and determine what you can reasonably afford to pay back to the creditors.

Under the new bankruptcy laws, this process is a little different. The court used to decide what expenses where necessary for you to pay and what were not. Necessary expenses where things like rent/mortgage, groceries, utilities, and so forth. Under the new law, a formula developed by the IRS determines this.

The government wants people to think long and hard about filing for bankruptcy. Before any bankruptcy proceedings take place, the potential filer must attend credit counseling. Also, the government can liquidate or non-exempt any assets that were purchased right before bankruptcy was declared. The attempts to hide money within property not subject to seizure are no longer an option for abusers of the system.

Bankruptcy filing is a serious matter. If you are determined to file, know which type you stand a chance of qualifying for with the courts. Since laws are tougher, be aware that bankruptcy lawyers will charge more for their part in the process.

Create an Achievable "Get Out of Debt" Plan

When you have an overabundance of debt, it's natural to want to get rid of it as quickly as possible. Interest costs can really add up, and having too much debt makes it difficult or impossible to take on debt for things you need. But when we're faced with more debt than we can handle, it is important not to panic.

Getting out of debt on one's own is best if it's possible. But many debtors make the mistake of trying to pay their debts off too quickly. They set unrealistic goals, and when they can't achieve them they become discouraged. This often ends with them filing bankruptcy, because they feel that there is no way around it.

The best course of action is to be realistic. Make a budget, and include everything that you spend money on each month. Then find what you can realistically do without, and put the money you save on those things toward paying off your debt. Here are some things we can often cut out of the budget:

• Eating out. Whether you pick up fast food for lunch when you're working, or go out to eat with friends at a fancy restaurant once a week, you can cut costs here. Take your lunch to work, and have dinner with your friends once a month instead of once a week. Or better yet, suggest a less expensive activity that you can do together.
• Vices. Cigarettes, lattes, and other things we buy as a matter of habit are good places to cut back. Quitting smoking is good for you anyway, and switching to regular coffee, made at home with some flavored creamer, would be less expensive. Every little bit helps.
• Entertainment. No one's saying that you have to sit at home and be bored all of the time. Just examine your entertainment budget and see if there are ways you could cut back. If you rent a lot of movies, for example, consider signing up for an unlimited plan.
• Travel. With gas prices usually going up instead of down, cutting back on travel can be a real money saver. Carpooling, and combining trips as much as possible, are two ways that can save you a substantial amount of money on travel.

It may take you several months or even a few years to get your debt paid off, depending on how much debt you're in and how much extra money you can put toward it each month. But as long as you're able to make your minimum payments and add a little extra to at least one of your bills each month, you will be making progress. You'll also be keeping your credit in good shape by making the payments on time. Just be patient, and you will eventually be debt-free.

Living Debt Free: A Guide for Getting Out of Debt

Finding answers to your debt problems can be overwhelming but "Living Debt Free" can be a lifesaver for anyone who is in debt. This 35 page ebook is a financial guide to help anyone who’s in debt get out of debt. Outside of sound advice, included in this ebook are worksheets, sample letters to help you talk to your creditors and an audio version for anyone who would rather listen than read the information.

Kristine McKinley, the author of this ebook, is a CFP (Certified Financial Planner) as well as a CPA (Certified Public Accountant). Her experiences with helping people who are in debt is why she decided to write this ebook. She put those experiences in writing to help others who feel like they are drowning in debt.

This ebook shows you exactly where to start. Armed with ideas on where to start, you learn how to free up cash and how to create your own system. You start to feel better from the get-go. It even explains how to deal with your creditors. The sample letters in the ebook make it easy for you to write those letters that you've been dreading. Most people don't know what to say in them, but with the help of this ebook you'll know just what to do and say.

It will teach you about credit scores, what they are and how they affect you. Why closing credit card accounts could hurt your credit score and other financial insights. You'll learn how to utilize your credit reports, correct mistakes and restore your credit score.

Staying motivated while trying to get out of debt can be hard but with a little patience and perseverance you can achieve a "debt free life". If you need help finding a way to get out of debt take a look at this ebook. It’s not very expensive and the help you get from it makes it a worthwhile investment in your financial future. I would encourage any one who needs this type of help to look into this ebook.

To learn more about "Living Debt Free" just CLICK HERE.

Determine Just What Your Debt Is...

The very first thing that you need to do to address your current financial position and reduce and eliminate your debt is to determine exactly what your current debt is.

Now this might seem very obvious and when you ask most people they would probably say that they know how much money they owe but more often than not it comes as a great surprise to them when they sit down with a pen and paper to work out exactly what the current debt actually is.

It is very difficult to remember precisely how much you owe on so many different areas of debt and it is only when you do take account of all the individual debts and add them up that you can actually see the extent of your debt.

Be prepared for a surprise because that is what happens most often and it will give you a really good picture of why you are struggling to make ends meet each week and why all the income that might seem reasonable isn't enough to cover your outgoings.

So step number one on your debt management program is to address the situation.

It is only after you have done this that you will be able to create a budget that will help you move towards eliminating debt from your life.

You will be able to compare your monthly spending to your monthly income and that will give you the opportunity to see how much is left over if any to start reducing your debt.

When you are making a note of your debt you must ensure that you put down everything that you owe even the most minor of debts because at some stage they need to be settled and even small debts that are left unpaid can give you a bad credit rating.