Spending more than you make is a fast track into debt. You may not realize your spending habits if you have not kept track. The first step to getting out of debt is to make a budget.

Creating a budget also shows you how much you pay each month to creditors. You could replace payments for student loans, car loans, and credit card debt into one lower payment. Debt consolidation helps you pay your debt while staying within your means

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How to Make a Budget: An Important Step for Eliminating Debt

Your income includes your salary, wages, tips, and profits. Your expenses may include:

  • Living costs, such as rent or mortgage, utilities, and food.
  • Payment plans, like for student, car, and personal loans.
  • Court-ordered obligations, such as alimony, child support, and lawsuit rewards. 
  • Retirement contributions, including your company-sponsored 401k or IRA.

Even with the best debt relief program, you will stay in debt if you continue to spend more than you earn.

Some ways to cut down on expenses include:

  • Cooking at home.
  • Choosing generic brands over name brands.
  • Buying in bulk.
  • Avoid casual spending, like on café coffee or convenience-store trips.

Sticking with a budget, even for just a few months, can save you a lot of money. Think of it as an investment in your future.

You may even find you enjoy a new hobby like baking instead of picking up a pastry from the corner store.

You might be surprised by the benefits of stopping debt directly at its source.