Budgets to Save Money and Pay off Debt

If you're looking for budgets to save money and pay off debt, you're not alone. With fears of job loss and worries about spiraling credit card balances becoming more common each day, resolving to take control of your finances is a smart move.

Using Budgets to Save Money and Pay Off Debt

The first step in becoming debt free is to figure out how deep in debt you really are.

  1. Add up your total debt you want to pay off. This can include credit cards as well as student loan debt, car payments, or personal loans.
  2. Decide how long you want to give yourself to be debt free. Depending upon your income and level of debt, you may need several years to accomplish your goal.
  3. Divide your total debt by the number of months you have to reach your goal. This will give you a rough estimate of how much money you need to come up with in your budget each month. (Just remember that the actual total needed to pay off your debt will be higher due to the varying ways interest charges are calculated on credit cards and loan payments.)
Save money

Next, you need to come up with a monthly budget that allows for room to repay your debt.

  1. Download a free budget worksheet from one of the many different sites offering these templates.
  2. Fill out your monthly expenditures for each category. If you're curious about how your expenses stack up to the typical household, check out the budget example listed in the LoveToKnow Save article Sample Household Budget Forms.
  3. Add a line at the bottom for your monthly debt repayment.
  4. If your monthly expenses and debt repayment amount exceed your income, look for places to cut back on your spending.

Tips for Cutting Back

While it's unlikely you'll be able to reduce fixed expenses like your rent and car payment, there are plenty of smaller changes you can make. Remember that saving a few dollars each day will add up over time as you're making budgets to save money and pay off debt.

Food

  • Take leftovers to work instead of buying your lunch.
  • If you know there are nights when you'll be too busy to cook dinner, look for sales on

easy-to-prepare meals so you're not tempted to waste money on takeout food.

  • When you go out to eat, order water instead of soda.
  • If you're going out to eat with a child who won't be able to finish his or her entire meal, just order a larger entrĂ©e for the two of you to split.

Entertainment

  • Have friends over for a night of playing board games instead of going out shopping.
  • Host a potluck instead of a formal dinner party.
  • Visit your local library to check out free movies instead of making a trip to the video store.
  • Cancel cable and watch your favorite shows on Hulu.

Miscellaneous Household Expenses

  • Instead of automatically purchasing the same brands each time you go shopping, make a point to try the next cheapest brand of the product in question. Many times you won't even be able to tell the difference in quality.
  • Don't pay people to do things you can easily accomplish on your own. Learn how to dye your hair and give your kids a simple haircut. You'll easily save hundreds of dollars per year.
  • Save money and save the environment by avoiding expensive commercial cleaners in favor of natural alternatives. Vinegar and water is a cheap way to clean most household surfaces. Take the savings even further by using old rags instead of paper towels.
  • Update your child's wardrobe by hosting a swap party with other neighborhood parents. Ask everyone to bring their unwanted clothing items, then let people pick what they need from the piles. This also works great with toys and books.
Get Save Advice

Get advice from our experts, the LoveToKnow community, and your friends!