Managing A Budget

One of the best steps you can take towards learning how to properly manage your personal debt is understanding how to create and use a budget. Especially if you qualify for bad credit personal loans, learning how to budget effectively should be your highest financial priority. No matter how much money you make, or how much you owe, using a budget is always a good step.


A budget is simply a method of organizing and monitoring the money that you earn and the money that you spend. Depending on your needs and preferences, you can use one of the following systems:

Paper and Pen – The cheapest method. Simply write down all of your income in one column, and list your expenses in a second column.

Spreadsheet – Any spreadsheet software, or cloud spreadsheet application, can be used. Track your income in one or more columns and expenses in one or more columns, using the spreadsheet to tally up the numbers.

Free software – A number of companies offer free budgeting software in a variety of formats for use with desktop computers, smartphones, and mobile devices.

Specialized Financial Software – You’ll usually have to purchase these programs. Learning them requires some effort but specialized software programs can help you track and monitor your income and expenses.

Once you’ve chosen your method, it is important to write down every single expenditure you have, as well as monitoring your income. After creating and becoming familiar with your budget, the next step is to incorporate paying back a personal debt as one of your regular expenses.

If possible, try to reduce extraneous spending and apply your savings towards paying down your debt as rapidly as possible. If you are too far in debt to be able to make regular repayments, you might need to consider taking out a personal loan.

creating a budget

Consolidating Debt With a Personal Loan

A personal loan is unique in that it is not secured by other assets like your car or home. Once you secure a personal loan, it is essential that you apply the entire amount towards paying off your other debts. When you obtain a loan to pay off a number of other debts, this is called “consolidating your debt”, converting a number of varied debt amounts and rates into one fixed and more manageable cost.

Some of the benefits of a personal loan include:

No/Reduced Prepayment Fees – You’ll pay little or nothing upfront to secure the loan.

Fixed Term - You will have to agree paying back the loan by a specified date, which will help you structure your payments into your budget.

Fixed Rate – The amount you’ll have to pay back, including interest, will never change. You will always know the grand total of what you have to pay back.

Fixed Monthly Payments – Every month, you’ll pay the exact same amount, making it much simpler to incorporate this item into your budget.