I wanted to write a post on budgeting your money to reduce debt. Money is essential, and we need it to run our society. Unfortunately, we will have to pay bills for the rest of our adult lives.

So, in this article, I want to start from the beginning. I want you to understand how important money is to your life. We need money to do almost anything: pay our bills, take care of our family, or enjoy a fun night out with friends.

So, I am here to guide you to be intentional and to add some perspective to your next paycheck. Most people would say, why should I budget? Budgeting is the only way to keep up with your expenses and know how much you spend.

What is budgeting? A budget can be defined as a tool that helps you track your spending.

 Following a budget helps you save money. We can allocate how much money should be spent for each category of bills you pay. This creates a clear plan for the things that are necessary for the budget.

 We can then eliminate the items that are no longer feasible. Instead, make room to save money for the things you are genuinely passionate about, like investing, vacations, and financial freedom. 

How Debt Affects Our Budget

Eliminating debt while budgeting helps make room to save money or invest. We will want to eliminate debt as much as we can. However, we must remember when we purchase anything on a credit line. It is taking more money from us than the actual item cost. 

Credit card payments cost more money to make monthly. However, the Bible says in Proverbs 22:7,” The rich rules over the poor, and the borrower is a servant to the lender.” Sometimes, we do not consider ourselves servants to anything. Still, we can be servants to many things, including our mindsets.

 We could be chained to something even if it is not tangible. There are many ways to start getting out of debt. Freedom is why getting out of debt is so important. If we are servants of debt to our lenders, we can not have space for what we want.

There are two ways that people try to get out of debt. The two most popular ways are the snowball and avalanche methods. The Avalanche is my favorite because it is faster, but I would only recommend it for those who have curbed their appetite for spending first.

The Snowball is suitable for those who need the inspiration to pay the bills step-by-step to build faith for the more significant accounts.

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How To Budget Your Money To Stay Out Of Debt

Let’s discuss budgeting to get out of debt. First, you need a clear vision of your money and where it goes. Then, for every paycheck, you want to sit down and decide what bills will be paid and what you will do with the extra money.

I use this financial budgeting book for my monthly paychecks. You want a list of your bills, when they are due, and how much the account is. This list will help you see where you can save and cut back.

If you don’t have extra money, this is the best time to see if you have wiggle room to find at least 20 dollars or more to start paying off any debt, if you have any outstanding. Or cut down unneeded bills like subscription services.

The more you can pay down, the quicker the process will take. Some people even use their 401k money to speed up the process, which can help if you only have 20 dollars to contribute. After determining how much money is needed for bills, You can consider the extra money for different things, such as investing, debt payoff, and sinking funds.

 A sinking fund is an account to save money for events that may come up, such as Christmas, Vacation, or savings for a new purchase. Think of it as a way to categorize your emergency fund.

Adopting new spending habits to stay out of Debt

Curbing our spending helps us save more money. It is easy to manage our money if we do not fall into consumerism. Advertising and trends are everywhere. The average person sees hundreds of ads every day.

Some people practice minimalism, a new and trending topic. Minimalism is a movement of people choosing to spend less on items to trade off for financial freedom. For example, I only buy what I need.

I am human and do have things that I want. For this reason, I set aside fun money to purchase items I want every month, which keeps me at a reasonable amount. Having an account just for me to spend money keeps me from overspending. I know exactly what the budget is every month and how to plan for what I want. 

 The best book I read that put purchases into perspective was ” Your Money Or Your Life” by Vicki Robin. This book teaches you that we trade our life energy or time for money. So before you consider your next purchase, ask yourself how many hours you would have to work to purchase this unit. 

This helps bring perspective to your purchases and if they are worth the cost. This method is beneficial for big purchases such as electronics. Or just to put your job and pay into perspective. Of course, you want to ensure you are paid the most for your worth. 

However, you choose to follow these methods or other methods mentioned online. Budgeting is beneficial for taking inventory of your money. You want to ensure you always tell your money where to go and how to work for you. Check out our Monthly Budget Printable if you need a budgeter for your finances.

I hope these blog posts can help you better your finances and achieve your desired success. If you enjoyed this article, be sure to check out our other money topics like “How To Prepare And Take Advantage Of A Recession.”