Improving Your Budgeting and Lowering Your Debt in 2010
With the 2010 in full swing now, many people are thinking about their finances and how to improve them this year. Because 2009 was such a difficult economic time, many people are now thinking about making changes to their budgets in order to lower their debt load in 2010.
If you are planning on making 2010 a year of budgeting wisely to reduce your debt, below are a number of detailed tips that can help you achieve your 2010 finance goals.
Ways to help improve your budgeting and lower your debt in 2010:
- Create a Manageable Budget: Creating a 2010 budget easy into the new year will help you stick to your budget all year long. Your budget items should include such expenses as housing costs including mortgage payments and maintenance, food expenses, outstanding debts such as credit cards, social expenses, children expenses, transportation costs, and your savings. Create an easy to follow spreadsheet showing your take-home pay for the month. Divide your expenses into fixed expenses (expenses that do not change each month such as the mortgage payments) and fluctuating expenses (expenses that can change each month such as the utilities). This will show you how much you will be spending each month compared to the amount of money you are bringing in each month. It will help you control costs and enable you to live within your means. Once you implement your budget, it is essential to track your daily expenses in order to stay within your budget.
- Reduce Expenses: To decrease your monthly spending, come up with creative ways to cut down on your expenses. This can include buying generic products instead of brand name products, shopping at consignment shops, surplus stores, and second hand clothing stores. When shopping, the key is to bargain hunt. You should always comparison shop online and in traditional stores, consider the quality of the product over the price as a quality item will often last much longer, buy only items that offer free shipping, and make use of coupons and discounts. Look for sample sales and add your name to a mailing list where you can purchase samples of products. As well, perform tasks that you may normally hire someone to do such as simple home renovations and repair.
- Reduce Your Debt: When it comes to reducing your debt, you should first pay off the highest interest rate credit card debt. Try to reduce the number of cards you have to 2 cards. Contact your credit card company to negotiate a lower interest rate. Contact a debt assistance company to see if they can consolidate your debts into one debt payment and one interest rate. As well, pay your bills on time to avoid expensive late fee penalties. You should also talk with your mortgage holder to see if you can renegotiate the terms of your mortgage so that you can get a better rate which will lower your monthly payments.
There are many ways to manage and reduce your debt. Because high debt can be very stressful, it is important that one implements a sound budget plan that can be easily controlled. By starting your financial planning early in 2010, you can put yourself on a path to financial stability.
Adriana Noton is a freelance writer who writes on a variety of financial topics including personal budgeting and debt consolidation. For more information about personal finance and debt counselling, ConsolidatedCredit.ca is a tremendous resource on the topic for Canadians.
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Yes, I think your advice is very sound here.
So many people do forget that one must load the cart at least as fast as it is unloaded.
Some forget that debt reduces buying power in the long run.
And, some forget that if we will just pay attention to where our daily expenses take us, it is amazing how much we can save by not buying the latte, but rather having a cup of nice hot instant at our desk in the morning.
All the suggestions you’ve made here are helpful.
I do hope that your many readers will take all these suggestions to heart.
Dr. Ann
Thanks for the comments. I hear all the time about people going to Starbucks everyday to get their latte and I’ve got to wonder if they are made of money. I’ve been in Starbucks and those lattes are not cheap. I’ve heard that you can save as much as 85% per year on coffee by making it yourself at home. For people that have two cups per day, the savings could add up to almost $2000 per year. Think about how many bills that would pay.
Hi Adriana,
I find that keeping track of my daily expenses and budgeting are the best ways to lower my expenses.
As somebody wise has said, it doesn’t really matter how much you make unless you control how much you spend.
I find your post helpful but there is one thing that seems to be missing which is trying to find ways to make more money if and when all the above is still not enough.
Maybe it’s an obvious point but I would have liked you to mention it anyway.
Vance
One of the best ways to reduce spending, therefore debt, is to stop using credit cards and use cash whenever possible. I find it harder to part with my cash than handing my credit card to waiters, cashiers, etc.
Very good points. It’s easy to spend money on credit cards, but parting with cash is somewhat different. A person I knew once told me if you don’t have the cash to buy something, than don’t buy it. If your buying something today to pay for it tomorrow, than wait till tomorrow to buy it.
Thanks for your tips indeed. From where I stand, it is not a so easy task to lower our debt, especially during such a hard time.
Among all the ways to help improve budgeting and lower the debt, I think to reduce our expenses is the most effective way these days.
Agreed. It’s not easy lowering debt. It takes a big commitment, dedication, and clear plan of attack. Knowing that its always as simple to reduce interest rates, pay more money, and do some of the other things that can lower debt, the first and most obvious place to reduce debt is by spending less. By reducing expenditures, a person is able to use more money to pay off existing debt while not accumulating any new debt. Thanks for sharing your thoughts.
Focusing on what we need and having a break on getting what we want would definitely lessen our expenses. Times like this will make us realize how essential is smart planning and spending. It feels good to splurge on some luxury later on when you have enough.
Very good points and thanks for sharing. It is very important these days to plan well and stick with the plan. There will be rainy days for sure, but if planned right, there will be some money to spend on sunny days as well.
Good ideas. Watch what you’re spending and remember to pay your bills on time.
Thank you for the tips. This will help improve the budget. Reducing the debt is interesting because when people are in debt, it’s hard to recover.
Great article here. All good points. Have to bring up the starbucks comment again. I do not even think Starbucks is that great. I think paying $5 for a cup of coffee or latte is nuts. I use to have a hard time tracking money. But as the article said, I have an excel spreadsheet that I use to track my spending habits. I try to avoid using the a/c and only drive my car if I have to. Also, do not have more than 1 or 2 credit cards. If you have more than that. You may find yourself in deep trouble!
The best way to get rid of debt is to not get in debt in the first place. Spend less than you make, and save up for high ticket items before you buy them. Things like cars and houses are of course impossible to save up for an average worker, but things like big screen televisions and stuff generally can wait.
Since the financial crisis started I have taken to writing down everything I spend. It has been a great way to keep track of expenses and to maintain a budget and save. I just wish i had started years ago
I think we all just need to always remember one thing- dont spend more than what you can afford to lose! That is the main crucial step in solving your financial crisises!