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How Learning To Handle Debt Can Increase Your Income

Though developing a budget is relatively simple and involves elementary math, many people are very resistant to the idea. Using spreadsheets to track their spending, putting together a formal budget and balancing checkbooks are not necessarily second nature, and there are lots of people out there who find it tedious to say the least!

The important thing that you need to remember, however, is that it is going to be in your best interests to figure out how your expenses are going to work with your income. Your budget should take your outgoing and incoming money into account, as well any expected increases and decrease. It may also include a buffer against unexpected expenses.

If software dealing with spreadsheets make you uncomfortable (and you are certainly not alone) you'll find that Google Docs and Open Office will let you use spreadsheets for free. At the very least, start jotting things down in a notebook designated for the purpose!

Start by creating a very simple spreadsheet with two columns. In the first column, write down your income and in the other, write down your expenses. Into the second column, put things like bills, your rent or mortgage, gasoline and groceries. Set aside 10 percent for emergencies.

Once you have that basic budget set up, it is time to start working with different scenarios. For instance, create another budget. This one will specifically be imaginary, though you will still have things like monthly costs and income.

For this second budget, however, remove things like your monthly credit card interests or your auto loan interest. Cut out 25% of your impulse buys. Then sum up the amount of these three.

This is the amount of cash that you could be saving every month. Even if the total ends up being less than 10 percent of the monthly expenses (though for most of us, its higher!) you are paying into funds that can actually be avoided.

You are the only person in your life who can decide whether that 10 percent overhead is something that is paying out for you. You will be able to buy some items sooner than you might have thought, but consider the fact that saving 10% APR paid on $2000 will equal $110. Also, lots of people only pay the minimum monthly payment, which costs them much more in the long run. This $110 is something that is added to the $2000 you spent earlier!

What is important to you, and what does a healthy financial situation mean to you? Developing a budget can help you figure out where you want to go from here!