Getting, and keeping, your debt in line with recommended financial guidelines is an important step in debt relief and credit recovery.
Syracuse, NY (PRWEB) April 12, 2007
Consumers know how hard it can be trying to work out monthly expenditures. All that spending to try and remember -- not to mention making sure the figures have been added up correctly on the calculator. Then trying to figure out where to prioritize spending. What a headache!
Thankfully, there is now a free household budget form available (http://www.debtsteps.com/free-household-budget-form.html) that works out everything. It uses financial ratios, recommended by the financial professionals, to help consumers make smart spending decisions and get their debts under control. Everyone can now use the same techniques that the credit industry uses, without having to pay accountant fees. Creating a realistic budget has never been easier with the form available from http://www.DebtSteps.com/.
This form has three easy-to-use sections; Income, Expenses and Ratios. Each area has clearly labeled sub-headings that expand to allow entry of individual financial data. The totals are constantly updated to reflect any changes made. Once the form is completed, a notice, advising if the budget is in balance or not, appears. Upon obtaining a balanced budget, it is simple to print the entire household budget in one go. Everything is clear and simple to read.
The Debt Income Ratios are the percent of monthly take-home pay that goes to paying debts. Financial and banking experts recommend that no more than 20% of monthly take-home pay (excluding rent or mortgage) should be used to pay debts and make loan payments. And, no more than 40% of monthly take-home pay should go to paying all debts, including mortgage payment.
The debt to income ratios (DIR) compare how much is owed with how much is earned. They are a basic idea of how healthy an individual's finances are. The lower the ratios, the more consumers have to save or spend on the things they fancy.
Using the information from the form, consumers can target the sections of their budget which are excessive when compared to recommended budgeting guidelines. This will bring finances into line quickly, and ratios will improve at the same time.
From DebtSteps.com: "Getting, and keeping, your debt in line with recommended financial guidelines is an important step in debt relief and credit recovery."
This household budget form also allows targeting of those debts for faster payoff that have the biggest impact on debt income ratios. Consumers can review their budget for areas to reduce spending, then apply the saved amounts toward debt reduction. Simple as that!
DebtSteps.com also has the following important advice for consumers: "Obviously, your primary goal is to get out of debt. We suggest your secondary goal be to minimize the damage to your credit while getting out of debt. By using Debt Income Ratios to manage your budget, you can get out of debt and also minimize the damage to your credit. Tracking your daily spending will help you to reduce debt faster. How? By making you more aware of where your money goes! Unconscious spending can kill a budget faster than anything."
It is worth remembering that creditors use budgeting guidelines when reviewing and approving credit. The same recommended guidelines are used in this free household budget form as those used by the financial community. If an individual's debt exceeds the financial communities recommended guidelines, then they have a higher risk of credit applications being denied. If they are approved for a loan then they will pay more interest as they will be perceived as a higher risk.
With the help of this free household budget calculator (http://www.debtsteps.com/free-household-budget-form.html), many more Americans will be able to create a realistic strategy for reducing their debt, without the need for bankruptcy.
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