Cash Flow Finance Small Business
3 mins read

5 Tips to create a debt killer budget

Model house with a jar and coins scattered.

Ever wonder why some people get ahead, buy a car, buy a house and go on fantastic holidays while you continually struggle to make ends meet? The secret is to plan for your goals and above all to BUDGET. You’ve probably heard the well known saying “The problem is not that you plan to fail, but that you fail to plan”.

By following the 5 tips below you can create a debt killer budget and get the things you want in life.

Use a spreadsheet

Find out what your expenses are. Be honest! Don’t leave anything out! If you do, you are only fooling yourself. Using spreadsheets to help you plan your budget can be useful because it can help with complex calculations so that you can see your incomings and outgoings at a glance. Digital Unite has a step by step guide on how to create an effective budget, and includes categories of expenses which you might not have thought of. You can also add to the suggested list, eg petrol, car insurance, medical and pharmaceutical expenses, clothing (don’t forget underwear and shoes). The list of expenses is extensive.

How do you know what you are spending?

If you have never made a budget before, it can be quite daunting to know where to begin. No More Debts would advise to keep track of supermarket receipts, petrol receipts, phone bills and any other expenses on a weekly monthly and 3 monthly basis. Include going out expenses. After all, not all bills fall due every week or month. Check this against your bank statements. With internet banking, you can do a daily tally. It is important to know not only the total amount of money spent, but what it has been spent on, so that you can decide what you can cut down on, if necessary. See the next tip.

Adjust your budget

If you have been brutally honest in the first exercise, namely listing all your expenses, you may find that they actually exceed your income. That may be the explanation of why you are not getting ahead. But how do you adjust the budget, so that it comes in at, or preferably below, your income? Delete all the items you can do without, e.g. bottled water (tap water is free), soft drinks, cigarettes, eating out ( more than once a week), buying household items on Gumtree or Ebay rather than in a retail outlet, and only buy exactly what you need, to avoid waste. How much food do you waste? Avoid fast food outlets. ASIC’s Moneysmart has useful information on how to go about adjusting your budget.

Credit Cards

Putting the shopping on your credit card is easy. It does not feel like spending money. After all, you are just waving a piece of plastic at a machine. The crunch comes at the end of the month when the card is due to be paid. Another trap with credit cards is just to pay the minimum amount. After all, that is all the credit card provider is asking for. But what about the interest? If you do not pay off the entire amount each month, the interest on the balance will be added to the amount due, so that in the next month, you will be paying interest on interest. With interest rates at 18%-21.5% per annum, this adds up very quickly. For a comparison of credit card interest rates look at

Set Yourself Goals

Keep your goals in mind, whether it be a new Smartphone, surf board or car. According to Money Advice Servicethis is the most important part of budgeting and getting ahead financially. It will keep you focussed on your budget and tracking your expenses. Make sure that your goals are realistic. After all, there is no point in having a Ferrari goal, if you are on a Mini Minor income. That is not to say that you should not strive for a Ferrari, but if that is your goal, you may need to adopt a plan to increase your income, and that is another whole topic.

About the author:

Gisela Ramensky LLM worked for over 30 years as a commercial and litigation lawyer. She also had extensive experience in the areas of both corporate and personal insolvencies, advising numerous clients facing bankruptcy, as well as acting for financial institutions in the area of debt recovery. She was a member of the Council of the NSW Law Society for 3 years and chair of the Human Rights and Immigration Law Committees . For the last 20 years she operated her own practice at North Sydney.

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