Life is not predictable. Especially not when it comes to
your debt and your finances. It seems like every time you
get ahead, something unexpected comes up that puts you right
back where you started. So how do you get out of debt and
stay out of debt?

In order to get out of debt, while also building a nice
safety net so you can stay out of debt, you need to get
a handle on the basics of money management. This is absolutely
crucial to your debt relief. Unfortunately, none of this is
taught in school, although it should be. It would be a big
help to millions of people. Most of us don’t learn anything
about handling money until we already in debt.

* Using a Budget

I know, you’ve heard this one before. And, like trying to
count calories, it’s not something many people can stick to
for any length of time. That’s because most people go about
it in a way that isn’t conducive to long term success. I
happen to agree with David Bach, author of The Automatic
Millionaire. David says you shouldn’t use a budget.

I know, I know, this subhead of this tip is Using A Budget.
Maybe it should be using a budget with a twist. In this
budgeting technique, we’re not going to count every penny
we spend. Instead, we are going to pay ourselves first, pay
our bills, and then anything left over can be spent anyway
you please and you don’t have to track every last penny.

If you have a lot of debt, you’ll want to focus on your debt
relief before saving for longer term goals like retirement.
This is because your debt, especially with higher interest
credit cards, is going to cost more than you will make if you
save that money.

Once you pay down your debt, begin paying yourself first by
putting a certain percentage away in a retirement savings
account, then pay your monthly bills such as mortgage, utilities,
etc. The rest is for you to do with however you please.

As your financial situation improves, consider increasing the
percentage of your income that you pay yourself. You may be
only able to say 10% of your income when you start but you’ll
want to consider increasing that percentage as much as you
can.

* Setting Financial Goals

To paraphase hockey legend Wayne Gretzky, you miss all the goals
you don’t set. You need to know where you are going in order to
get there. And your financial goals will help determine how much
you pay yourself first. If you want to retire at age 50, and live
off the same income you currently make, you won’t be able to do it
by saving 10% of your income each year.

Set financial goals. Determine what you want your financial future
to look like, and how much money you’ll need to make that happen.
This will help you figure out how much you need to save in the
present.

* Building A Cash Reserve aka Your Safety Net

What’s next after you’ve climbed out of debt? Build a cash safety
net so you don’t slip back into debt, the way dieters put back all
the pounds they lose if they aren’t careful. Building up a cash
reserve will prevent you from piling up debt when unexpected
emergency expenses occur. How much should you have in your cash
reserve?

A good rule of thumb is 3 to 6 months of your expenses
but ultimately it will be decided by what makes you comfortable.
For some people, that may be a full year’s worth of expenses.
This could be true for a lot of people that were deep in debt
and living paycheck to paycheck. They experienced the horrible
stress of such a situation and never want it to happen again.

Learn more about how to debt management with Freddie Johnson’s free articles on debt relief, debt consolidation and credit tips at http://www.mydebtconsolidationtips.com