What is budgeting?
Budgeting is taking control of all your income coming in and allowing yourself to make the necessary changes to the income going out. Budgeting can be compared to writing a paper; when you write a paper, it is important to create an outline. By creating an outline, you are organizing your topics and designating the proper content into each topic. Therefore, when you implement a budget, you start to organize your financial outline; which in reality allows you to see where all your income is going too. Once you have started your financial outline, you will need to start identifying what you will be addressing first; in other words, what are you topics which in reality is asking what are your expenses? Once you put together your financial outline and your topics in place, you will have a visual image of where your income is going; thus allowing you to have control of where your income is going as well as where to make some necessary changes.
Why can’t I just put everything on my credit cards?
The purpose of goal-based budgeting is to plan what one is going to spend within the limits of one’s net income. Most people who “just put everything on credit cards” do not pay them in full each month, thus creating additional debt. Current charges on cards must be paid in full each month as part of the budget/spending tracking.
What is a creditor?
A creditor is a person or business to whom you owe money.
What are “Priority” debts?
“Priority” debts are government or court induced. Examples of “Priority” debts are
- Child Support
- State Income Tax
- Federal Income Tax
How can I improve my debt-to-income ratio?
There are two ways of improving your debt-to-income ratio. The first is to increase your income. The second is to reduce your debts.