Decrease Your Worries - Become Debt Free

Firstly you must work out a budget. A budget is a plan of your finances. It includes the amount of your income and all your expenses, and may include the amount you intend to save, and money for your rest and relaxation (known as r & r).

One way to work out your budget, is to write all your expenses down and work it out by payday, if it is weekly, or fortnightly, then convert it to yearly (for example, if your health fund costs you $170 a month, you may break it down to, yearly $2040, which converts to $78.46 a fortnight or $39.23 a week). Factor into your budget, your house payment or rent, your health fund, insurance, food, telephone, electricity account etc. Do this for all of your expenses and build into your budget any maintenance of your vehicle repairs and fuel costs (which have been going up, so add a little here to cover it). All of these expenses should be added up and shown as a total amount of the debt side of your budget and on the other side, the credit, is your total income after tax as this is your available income. Open a Bank account and put the figure of your budget expenses in and do not touch it unless you are paying one of these accounts.

Stick to your budget for your groceries. Your weekly food expenses can be slashed, if you shop around, and the generic brands are often just as nice. You may even save by buying in bulk and putting some in the freezer, and mostly buy the cheaper meat cuts. Look for specials, but only buy what is on your list, as a special is not a special if you do not need it. There are many and varied ways to save on food, but only buy treats occasionally.

If you are a young person starting out, resist the urge to buy all new furniture, or even a new car at the start. You can get very good 2nd hand furniture if you shop around at 2nd hand places or auctions. You can always update when you get yourself established. We all managed on 2nd hand furniture at the start years ago.

Never fall into the Credit Card trap. If you need a Credit Card, only use it for emergencies, or if you can pay it back, in at the most, 3 months. Do not use it to 'keep up with the mates'. Never use it for a "loan" to buy a car for example, go to the bank and get a cheaper loan . You do not want to to be paying it off at the high interest rates that they attract. You do not want a "black mark" on your credit history record, which could come against you at a later time, because if you are applying for a home loan, for instance, this will mean the major banks won't touch you and you will have to go through other Financiers, who are called "Subprime", which always have a higher than the going interest rate.

If you must have a mobile phone, be very careful about the plan. In fact, it is good idea to buy prepaid, so you don't overspend - they are a great tool, if you use them wisely.

If you are saving towards a home, you must put some money aside each and every payday. This way you can show the lenders that you have a very good savings habit, and that you can manage. When you do take that step towards buying a home, shop around for a home in the price bracket you can afford. Also shop around for the best deal with the Banks and Financial Lenders, and always check if they penalize you for paying the loan back early. When you get settled into your home, and you are paying it off, see if you can pay a little more at times. This will save a lot more off your interest bill over time.