Managing Your Debts to Avoid Bankruptcy

If you don't feel confident about managing your debts yourself, this information also provides an overview of how to find a reputable nonprofit credit counseling agency that can help you. In addition, this website warns you about actions you should never take when you're struggling with your debts, such as taking out certam types of loans or writing bad checks.

Build a Get-Out-Of-Debt Budget

How To Set Up Your Budget

Next, figure out your current total monthly mcome, including your monthly take-home pay (your gross income minus all tax and health benefit deductions) and any other income you receive on a regular basis, such as rental income, child support and/or spousal support payments, royalties, and the like. Be sure to include your spouse's or partner's monthly income as well.

You`ll notice that the worksheet groups your expenses into three different categories: fixed expenses, variable expenses, and periodic expenses. Let's take a closer look at each.

Fixed Expenses
Fixed expenses are expenses that do not change from month to month. They include your mortgage or rent payment and the payments on your car, your home equity loan, and on any other loans you may have. Your fixed expenses also include the amount you spend every month on such items as insurance, child care, tolls and parking if you drive to work, cable or satellite service, Internet access, court-ordered child support and/or spousal support, a monthly gym membership, and the like.

Variable Expenses
Variable expenses are expenses whose amount changes each month. Common types of variable expenses include groceries, gas for your vehicle, restaurant meals and snacks, entertainment, utilities, dry cleaning and laundry, and spending on clothing and body care services (e.g., manicures and massages).

Periodic Expenses
Periodic expenses are expenses that you only pay once in a while, such as tuition, insurance, auto registration, haircuts, and property taxes. Even though you only pay these kinds of expenses occasionally, every month you show be setting aside the money you will need to pay each of them when they come due. To determine a monthly amount to save for each of your periodic expenses, calculate the total annual cost for each of your periodic expenses, and then divide the amount by 12 (for 12 months) to get a monthly amount. Record the monthly amount on your budget worksheet.