Having a bare basic budget plan is one way to achieve debt relief as quickly as possible. If you are currently in a difficult credit situation, having a typical budget plan may not be enough for you. At least, if you want to get out of debt faster, you might have to revise your monthly budget to accommodate this financial goal.
What you need right now is a frugal budget plan.
But what exactly does it mean to be frugal? Contrary to what you may believe, this is not about being cheap. You are not going to restrict your lifestyle and make yourself miserable in the process. If that is how you feel, then you are not implementing frugality the right way.
Being frugal means you are prioritizing the important expenses only. Even if you know you can afford it, you will not buy something that you know is not really needed. This is a good trait to have and it is even considered to be attractive in the dating scene.
According to one survey, 9 out of 10 Americans consider frugality as an attractive trait in a prospective partner. When you know how to be frugal, that is an indication that you know how to manage your finances properly. You make smart decisions about your money and that means you are more likely to find financial success.
A frugal person is also someone who knows their priorities. They know how to control their urges – which means they have both discipline and self-control.
Some people are naturally frugal but some need to develop their habits. If you are one of those who needs to practice, you can accomplish that by creating a bare-basic budget plan. You can try living a frugal life by following this type of budget.
How a bare-basic budget plan helps during debt consolidation
Having a bare basic budget plan is not just to help you get used to a frugal lifestyle. You can also use it to help with your debt consolidation efforts. If you want to achieve debt relief quickly, you might want to use this budget plan.
There are a couple of benefits to gain when you use this type of budget plan while in the midst of a debt consolidation program.
Helps you increase your debt payments
A bare basic budget plan minimizes your expenses. After all, you will be focusing on the priority expenses – most of which are essential for you to survive. If an expense is not important for your survival, you can stop spending on it. When you spend less, you have more money left over from your income. This will allow you to increase your debt payments significantly. When you increase your debt payments, you can get out of debt faster. This can help you save money in interest payments.
Keeps you from overspending
Living on a bare basic budget plan will keep overspending from happening. At least, this is true if you strictly follow this budget. Frugality focuses on the expenses that are important to you. This will train you to be smarter with how you use your money. It will also make you get used to living below your means. If you can limit your expenses, you will have more extra money. This is something that you can use to add to your emergency fund so you do not have to borrow money in case the unexpected happens. According to reports, there is one generation who probably understands how to do this. Apparently, MIllennials are becoming the “biggest deal-seeking generation”. By being frugal, they can save more of their money – with 16% of Millennials having more than $100,000 in savings.
Encourages you to be creative
Following a bare basic budget plan does not mean you should cut off entertainment from your life. On the contrary, you need to view this as a challenge. If your spending resources are limited, you should start getting creative with your “wants”. For date nights, you can set up a romantic date in your backyard. Or you can find an isolated place in the city to relax and gaze upon the stars with a loved one. For family affairs, you can research activities and events organized by the local government. There are so many options for you to enjoy life without spending too much money. This will allow you to find your happiness and still have enough extra money to increase your debt payments.
Teaches you how to survive a financial crisis
Finally, a bare basic budget plan can train you to survive a financial crisis. Although debt consolidation is an effective way to get out of debt, it is not always guaranteed that it will work. In case your current debt relief program does not work or your finances take a turn for the worse, you are prepared for that. Or at least, your budget plan should help you survive on very limited financial resources. You are already used to living only on basic necessities and you have practiced being creative on other things.
Tips to create a bare-basic budget plan
So how can you create a bare basic budget plan to help make debt consolidation easier? What should you do to create a plan that will make debt relief come quickly?
Here are some budgeting tips that you can follow.
- Start by itemizing all your expenses and make sure to include everything – even trivial expenses like buying coffee in the morning.
- Go through it one by one and cross out anything that you do not need to survive. These include eating out, paying for subscriptions and cable TV, etc.
- Look over the essential expenses and see how you can still save on them. For instance, you can save on food by buying in bulk.
- Make sure to include some savings for your emergency fund.
- Get the sum of all your expenses. This is your bare basic budget.
While it may be contradictory to what you are trying to do, set aside a budget for entertainment expenses – even if it is just a minimal amount. Having some funds for this can help stop debt discouragement from happening. The rest of your entertainment should be free.