Guest Post from Myrina Stein who is a regular writer for various finance related communities including Oak View Law Group. She is well equipped to write articles on debt relief, debt consolidation , debt settlement, bankruptcy and other credit issues.

Incurring debt is easy but getting out of debt is not. Many individuals are falling into difficulty with their debt for various reasons, such as regularly overspending, huge unexpected medical bills, credit cards out of control, wage reduction and losing a job. But whatever the reason is for falling into debt it is essential to come out of it as soon as possible.  There are several ways to achieve debt relief, one being budgeting. Appropriate budgeting can give your life a fresh start and can make it easier for you to come out of the debt.

So let us have a close look at some important tips and tactics of budgeting.

The initial step of budgeting is to keep a track on your income and expenses. Make a list of all the sources of your income and expenses, no matter how small (or large) it is. Categorise your expenses, like house rent, food, clothing, entertainment and of course, the cost of debt.

Now equate your expenses against your income to find out your net cash-flow position. Your goal should be to get this into a positive situation, that is, your income is greater than your expenses after allocating funds to bring down the debt.

Where to make some savings to improve your cash-flow? Start with the luxurious expenses, like cable TV, eating out, magazines and non-work related travels. Reducing the luxuries will always be the best place to start for you to make some real savings with the least impact on your lifestyle.

Prioritize your expenses and make monthly payments accordingly. Top priorities on any expenses list are food and shelter. Shelter includes your rent, mortgage payment, or real estate taxes. Next in line are essential utilities like heat, electricity, and water services.

Where to make more savings? Consider buying used items rather than brand new ones. If you buy one year used car rather than a brand new one, you will get 95% of its value for about 75% (or less) of its price.  Similarly used books are a fraction of what a new book costs but you still get a good read.

Now, revist your expenses after allocating for your new approach to spending and you should be able to start saving a considerable amount of money. Now, it’s time to start paying off the debt.

For paying off your debt a great option to consider is the Debt Snowball method. The Debt Snowball method is a debt reduction strategy whereby you start paying off your smaller debts first while paying minimum on the larger balances. Once the smallest balance is paid off, proceed to the next slightly larger balance of debt and so on.

This snowball method will not only help you paying off the debt but will also boost your moral.

Proper budgeting will enable you to pay off  your essential bills on time and save some money, with which you can pay off your debt.

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