You will need a little time to develop your budget--it's not a five minute exercise--but should not take longer than a few hours if you gather the necessary information first. Get everyone who will be involved in spending involved in developing the budget.
Some of the items and information you will need to develop your budget are:
- All current monthly loan payments.
- All other monthly expenses (such as child care, dues, etc.).
- Records of variable expenses (for example, utilities, food and car repair) from the last 12 months. This will give you an estimate of your monthly expenditures.
- Records of annual or semi-annual expenses (such as insurance and taxes).
- An estimate of what your new mortgage payment will be.
- Records of other non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type.
- Records or an estimate of personal expenses (entertainment, travel, etc.)
- Having a current copy of your credit report can be very helpful. Not only will it reveal any inaccuracies in your credit history, it will also give you a clear picture of not only your total debt but your monthly obligations.
Be realistic in your budget assessment. Make provisions for possible increases in some items (for example, school tuition's, insurance and taxes). Then, look for ways to get (and maintain) control over your budget.
Most People Spend 10% More Than They Make! You probably know how much money you made last month, but do you know how much money you spent? Or do you know how much money you have left to spend this month? If you don't you're not alone, most people have no idea. The fact is most of us spend 10% more per month than we make. That comes out to $431 per month based on the average American income. No wonder the average credit card debt is now at $8,500!
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