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Welcome back for Part 2 of the Budgeting to Get Out of Debt Series! Part 1 of this series discussed assessing your debt and breaking down your finances. If you didn’t get the chance to check out Part 1 yet, head over there first, by clicking here! If you’ve already checked out Part 1, let’s jump in to Part 2!

If you’ve made it through Part 1 and you still aren’t exactly sure where to begin planning your budget, I’ve created a free printable titled “Budget Like A Boss” for you to use! Its a simple way to track your expenses month by month. You can simply print one for each month. In some areas you will see that some of the household items, such as mortgage/rent is pre-filled. You should add the rest of the expenses that you have in your home, the balance, payment, arrears, etc.

Now that you’ve assessed your debt and have broken down your finances, let’s talk about knowing your options and about your spending habits. I’m also going to let yall in on a little secret, the Debt Snowball Method!

Knowing Your Options When You’re Behind

Getting behind on bills is very overwhelming, but it is important to know what options you may have. Take a moment to go back to the breakdown you created when assessing your debt. Highlight all of the bills that you wrote down that are in arrears. Before doing anything else, contact each of those creditors and let them know your situation and that you want to work on bringing those accounts current. A lot of the time, creditors are willing to work with you if you are making the effort to get caught up. Ask them about any available options they may have. They may allow you to add a little extra to your current monthly payment to get caught up on back payments. They could also have programs that can assist you. While it may feel like you’re alone in this situation, you never are! There is always someone else dealing with the same struggle. Asking for help can be embarrassing, but know that you don’t know these people and they don’t know you. Most of the time if you ever had to call back, you’d talk to someone different because there are so many representatives, so don’t let embarrassment get in your way. They deal with this all the time, rest assured, you are not their first rodeo!

Now, let me tell you, you do have to be nice to the representative that you’re speaking with. I know this can be very frustrating, but you cannot take that frustration out on the person helping you. Trust me, I know how that goes! It’s frustrating when you need something to happen and the representative doesn’t seem to be listening. While you really want to let them have it, you can’t do that. Just try to be as calm, nice and respectful as you can be. If you go off on them demanding things, you can trust and believe, they are not going to try as hard to help you.

When you’re speaking with the representative ask them for more than what you really need. By doing this, should they choose to negotiate with you, you may end up right where you really wanted to be in the first place. They need the account to be brought current, and you want to do just that for yourself to get rid of the debt. You both have a common goal. Sometimes you may have to ask to speak with a supervisor because the initial representative may not be in a position where they can negotiate with you, so don’t flip out on them if they say they are unable to help you. If you happen to get a representative that says that, request to speak with a supervisor.

Spending Habits

I know, I know. This is one of the hardest parts, but you are definitely going to have to adjust your spending habits while you’re working to pay off your debt. You will still have to adjust your spending habits even after getting out of debt, because you don’t want to get right back in the same situation. You’d want to adjust your spending habits anyway if you plan to save after your debt is paid. I used to hear people say that “‘so and so’ has money, but he’s tight.” That is a phrase that people use when they know someone has a decent amount f cash in the bank, but doesn’t like spending it, in their eyes. Well, how do you think they got to a point of having money in the bank or a savings? Because they are not out buying too many things that aren’t a necessity.

Let’s get back on track, so now that you have created a breakdown of your financial situation, look back at all of your expenses. Is there something that you can cut back on? Are you able to cut back on how often you buy clothes, eat out, unnecessary grocery items, etc. If you’re behind on your bills, it would be best to cut back on anything that you don’t necessarily need, until you get caught up.

Let’s talk about why you need to adjust your spending habits. Reducing your spending habits will allow you to put that ‘extra’ money on the past due bill payments. Since you’re working to pay off the past due amount, you’ll have to pay more than what your minimum payment is on the accounts until you’re all caught up. Only two things can really happen, cut your expenses or find a side hustle. If you’d prefer to cut back on your expenses, look back at your financial breakdown and take a look at those flex expenses and see what you can live without, or what you could minimize. Can you get rid of your cable provider that may cost you $100, and sign up for Hulu, that costs you $6.99? Does anyone still have a landline? If so, can you get rid of that and only use your cell phone? Can you limit buying clothes to only when you need them, versus buying just because something is cute? You can also work on cutting back on eating out and focus on eating breakfast at home, packing lunch and cooking dinner at home. You have to have willpower. If something is more of a luxury, rather than something you need to have, get rid of it or cut back on it until all of your debt is caught up.

If you happen to be leaning more towards finding a side hustle, you can do that too. It’s always easy for someone to tell you to get a second job, but that’s not always easy especially if you have a spouse and children. Take a look around at what you have at home. Is there anything that you could get rid of? You could possibly use those things to host a yard sale. Do you have a hobby or talent? If so, maybe you can turn your hobby into side hustle. If none of that works for you, ask your current employer about an opportunity for overtime.

Snowball Method

Have you guys ever heard of the debt snowball method? This is one of the most effective ways to get out of debt. If you’ve never heard of it before, let me let you in on this little secret! The debt snowball method consists of working on paying off your smaller debts first. Once the smaller debts are paid, you roll the money that you were using to pay the smaller debts into the next smallest balance. This allows you to pay the next debt off even faster because more money is being applied. You would continue this process until you reach the debts with a higher balance. By the time you get there, all of your smaller debts will be paid and you will have even more money available to apply to the largest debt so that you can tackle it quicker. A lot of people think to work on the largest bills first, but that’s actually backwards. Working on the smaller debts first, in the end, will allow you to apply more money to the largest debt when you reach it. Now the name of this method makes since right? Snowballs start of small but then as you continue to build by rolling the ball in more snow, they grow. This is what you’d be doing with your money! You can thank me later for this one!

Head over to the last part of the Budgeting to Get Out of Debt Series! Part 3!

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