Living within your budget is how you can start saving up and how you’ll give yourself that essential safety net that will help you feel secure no matter what life throws at you. When you consistently go over your budget, however, and worse, go into debt to cover your costs, then the problems start. It’s too easy today to owe money to many different creditors. From credit cards to loans and now to repayment plans like Klarna, there are many ways you can spend money you don’t have.
A few of those debts are easy to manage. Their repayment programs are designed to make high costs more affordable, after all. It’s when your repayments pile up, and suddenly you owe more per month than you make that things become dire.
Treating the source is the best way to make sure you never get in this situation again, so use this guide to help you build a better budget and get on top of your finances.
Start with Your Debts
You cannot budget your way out of debt, but you can make it far more manageable. To do this, however, you cannot run from it. If you make your creditors chase you, then your options will only shrink as time goes on. By first working to enter an individual voluntary arrangement or IVA, you can consolidate your debts and pay them off in more affordable installments.
Unlike a consolidation loan, this is done with the supervision of an insolvency practitioner, who will get in touch with your creditors on your behalf and organize the repayment plan. If this doesn’t work, then you can start looking into consolidation loans or into debt forgiveness.
Understand Your Fixed Costs
The first step will bring your unmanageable debts into one easy repayment, but that doesn’t mean you can stop there. To really get on top of your finances, you need to start from the ground up. Start by understanding your fixed costs. This includes things like taxes, mortgage or rent payments, and utilities. Most of these can actually be lowered, but you’ll need to do things like use a tax accountant, switch utility providers, and even go to your bank to negotiate your mortgage. Keep in mind that renegotiating won’t always fetch you a better deal.
Put Savings Away First
It’s hard not to spend money when you have access to it, especially for things that are technically essential, like food. That’s why you’ll want to put away a set sum into your savings account as soon as you get paid. Technically you can take the money out of your savings account if you need it, but if it’s not initially there when you’re out spending, it can help you keep those savings out of reach.
Ways to Save on Essentials
You’ll want to live fairly bare-bones until your savings account reaches a healthy level. To help you make that sooner rather than later, use these top tips:
- Shop frozen foods instead of fresh for deals
- Buy essentials in bulk to spread out the cost
- Shop bulk with others to split up the savings
- Prep food and store it properly
- Make everything from scratch
These tips can help you redefine how you shop, and you don’t need to stop doing them once you’re more comfortable, either. A lot of time, you’ll end up spending more on convenience. Doing things from scratch yourself can help you save, and you’ll also be eating healthier and enjoying higher-quality food as you’ll know what has gone into it.