Budget even while you are in debt – 6 Tips to balance your finances

The following is a guest post: It’s not at all an easy task to become debt free and stay that way throughout your life. At least not in the current economy where just cost of living is high enough. In such a circumstance, you need to work really hard to stay away from debts and secure finances.

It’s definitely not easy either to avoid borrowing completely. After all, you can’t manage to buy a house or a car without borrowing until you’ve enough wealth to splurge. For most of the middle class Americans, student loans, mortgages, due credit card bills and auto loans are quite common. And that’s why debt is also a common problem that everybody faces.So, are you also struggling to manage your loans and debts? If yes, then you must be glad to know that there is a solution for your financial problems. To iron out all the financial creases you need to budget. Yes, this may sound cliché but budgeting is essential for financial well being. With the help of a smart and reasonable budget plan you can overcome all your financial hurdles with time.

Budgeting is important, but why?

Now, if you’re to conclude that budget is essential only for a debt free life, then you must think again. There is more than just debt relief that you must know about budgeting. The following are some benefits that you may expect from a proper budget plan:

• Helps you get a control over your money.
• Makes it easier to fulfill financial goals.
• Provides opportunity to build wealth.
• Prepares you to face financial emergencies in future.
• Safeguards your life after retirement as well.

Definitely they are reasons enough to keep you budgeting. To get all these benefits you’ll have to stick to your budget ardently, even when you’re in debt.

How can you budget even when you’re neck deep in debt?

It’s difficult to implement your budget effectively with an anxious mind. But when you’re burdened with too much debt, it’s quite difficult to keep your cool. That’s why budgeting may seem difficult when you’re struggling to pay off your debts. Most people even can’t decide whether to save or to eliminate debts first. The reality is, you can’t make a choice as both the formalities are equally essential and you need to take care of both for a wealthy life. Here is how you can budget even when debts are there to pay off:

1. Keep your goals in mind while budgeting: Before you start budgeting, you must ask yourself exactly what you want to do with your money. Apart from debt, you may have other financial obligations to manage. You may also have plans to go on a vacation or buy a house. So, you need to save separately for your goals and you’ll have to do this along with paying off your debts. Having concrete financial goals will actually motivate you to follow your budget and you’ll be able to save more.

2. Pre-calculate your expenses for the year ahead: You must be well-informed about your expenses from beforehand. For instance, there can be monthly installments for mortgage, credit card debt, insurance premiums and other normal household expenses. All these are fixed expenses that you need to manage. So, you must plan for the expenses in advance. Categorize all the expenses and note down the total amount and applicable interest rate. This will help you to evaluate exactly where your money is going and how you can save enough. With proper planning it’ll be easier to keep debts well under control.

3. Find out better ways to hoard: As you can see, it’s essential to budget to save enough for a secure financial future. So, just a single emergency fund or a savings account won’t be able to help you much, specially, when cost of living is so exorbitantly high. You must work hard to save through every possible way. You can try to increase your income. Some part-time job may help you to increase your monthly savings. If possible always try to set aside at least 3 to 4 months salary for financial urgencies. It’s better not to use that savings even for debt payments. You must save separately for your monthly debt payments.

4. Avoid overspending: Of course, without controlling your spending habits you won’t be able to make your budget work. Now, by cutting expenses you’ll be able to save your hard-earned money and the chances of debt accumulation will reduce as well. So, if you’ve the habit of spending almost $100 everyday just for fast-food or you can’t shop grocery with less than $900, then it’s time to change your habits. After all; you need to budget to restrict yourself from overspending. So, to make your budget plan effective you need to put a stop to unnecessary expenses.

5. Learn to use budgeting software: The traditional way of formulating budget is to accumulate all your bills and pay-slips to calculate manually what to spend and what to save. This manual evaluation can be hectic. How about adding the power of technology to your budget? Yes, you can do that with the help of budgeting software. These software programs not only help to categorize your expenses but they also help to evaluate exactly how you’re progressing. In this way, it’ll be easier enough to proceed with your budget and stay away from debt successfully. You can easily install a budgeting software and use it at your convenience. Many prominent financial websites provide these software.

6. Keep monitoring your progress: To succeed in your get out of debt plan, you’ll have to keep monitoring your progress regularly. The budgeting software mentioned above will help extensively in monitoring your progress. Apart from that, you must keep checking your monthly bills. This will help you to be sure that you’re not missing a payment on any bill. A portion of your savings will go to the debt repayment. So, you must also check how much debt you’ve been able to pay off. To be very precise, you need to be vigilant about your expenses and improvements so that you can prepare your next plan of action appropriately.

These 6 tips are enough to make you budget successfully even when there are debts to manage. So try to follow these tips and break free the shackles of debt.

Photo Credit: Nate Embrey @ Death To Stock


  1. Great tips. When I was getting out of debt I didn’t use budgeting software, but I did sit down every month and make a budget in excel. I also tracked every penny that I spent in excel to make sure I was accountable and I wasn’t over spending in relation to the budget I’d made. Without a budget you can be stuck in debt forever and nobody wants that.

    1. Yeah, I started out with an Excel spreadsheet and created some basic categories. I still kind of use that today but I use budgeting software to log my purchases and track all my spending. It’s help me really stick to a goal and see where my money is going. I think that is important part here, or you may constantly be spending more than you make!

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