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Debt Reduction Education

1 - Your Debt2 - Your Budget3 - Reducing Your Debt4 - Debt Consolidation5 - Federal Student Loans6 - Avoiding Debt7 - Resources




Making a Budget

A budget is just a written plan of how you plan to spend your money every month, which will allow you to contribute money to savings and retirement.  A good budget will help you live within your means, or even below your means.  A budget is a long-term, even permanent activity.  You can’t dig yourself out of debt then go back to your old habits that got you in debt. 

When you are in debt, a budget is a great plan to help you get out of it.  It isn’t rocket science but most people fail at this task because they simply don’t stick to it.  Building and sticking to a budget is like sticking to a diet and exercise plan.  Most people have good intentions by starting but then they eventually go back to their old habits and stop all together. 

If you are in debt $10,000 and you create a budget that allows you to save $250 per month then in 40 months (or 3.33) years, you will pay off the $10,000 debt.  If you think 40 months is too long, then you can look at your budget to determine if there are any additional costs you can cut or reduce.  You may realize that if you cut your cable TV off, it will save you $100 per month.  Adding the $100 to the $250, you will be able to save $350 per month and now it will take 28.6 months (or 2.4 years) to pay off the $10,000 debt.  If you are still not happy, you can cut other expenses or try to increase your income by finding another job, getting a part-time job or starting a side business.

The hardest part of a successful budget is “SUSTAINING” it.  You have to stick to it month-after-month and eventually you will hit your goals.
  • Living on a budget will allow you to:
  • Save money, especially for setbacks, such as losing your job.
  • Live at or below your means so you can save money.
  • Allow you to eventually buy big ticket items without using credit or taking out loans.
  • Measure your performance.  If you are not meeting your goals, your budget will make it evident.
Below is an interesting video from Financial Advisor Dave Ramsey about creating a budget.


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Sorry to hear of your sister's poor health and debt problem.

I'd say eating is far more important than paying off debt. So eat first!

Unfortunately, due to her age and health problems earning an income isn't feasible.

If she's on a tight budget, then there is no room to cut anything.

If she has a home with some equity, she maybe able to get a reverse mortgage to get some money. See the following line about reverse mortgage. (

There are also numerous government social support systems (Medicare, food stamps, welfare) that your sister may quality for.

Another option is having her family come together to help out financially if feasible. If 10 family memebers donate $50 per month, that's $500 per month for your sister.

Hope that helps!

My 82 year old sister has credit card debt and has limited income. She can buy groceries or pay debt but not both. She also is in poor health. How should she handle this problem?


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