Secured Loans

Creating a Careful Budget Plan for a Household

In order to pay off a loan whilst covering your basic household expenses, it's important to draw up a budget plan. You can meet your commitment to your lender without sacrificing your family's needs by tracking your expenses and avoiding unnecessary purchases. If you have expensive fitness centre memberships or DVD subscriptions that you aren't using, cancel these expenditures to save money. Cutting out habits like smoking cigarettes, bringing home takeaway several nights a week or buying impulse gifts will help you trim your budget considerably.

Loan Repayments and Household Expenses

When you take out a loan, you must revise your budget to accommodate your monthly repayments. If you haven't been following a budget, this is the ideal time to draw up a careful but realistic plan for paying off the loan. Before you can create a practical budget, you must know exactly how much money you spend in various areas of your family's life. For one month, track your expenses by saving all of your receipts and bills. At the end of the month, calculate how much you've spent on housing, food, transport, utilities, leisure activities, insurance, personal care, pets and other expenses.

When you draw up your budget, you must also take all of your secured and unsecured debts into account. If you have credit cards, department store accounts, medical loans or student loans, you'll need to include all of these in your budget, as well as your new loan. Whilst your essential needs like food and shelter must take priority, your other financial commitments are also important. Due to the loan company rights that you agreed to at the point of purchase, if you've taken out a secured loan using your house, car or other property as collateral, this property may be repossessed if you cannot keep up repayments.

Once you've subtracted your monthly expenses from your income, you'll know how much disposable income you have left over for treats, entertainment or luxury items. If your lender allows you to pay off your loan early, you may dedicate a portion of your disposable income to making larger monthly repayments. You may also choose to add these funds to your emergency savings account.

Trimming Your Household Budget

If your monthly expenses exceed your income, or if you have a very narrow margin left between your income and your liabilities, you may need to reduce your household expenses to avoid falling behind in your loan repayments. Consider saving money by joining a car share programme instead of driving your own car to work, preparing meals at home instead of buying takeaway or planning free family leisure activities instead of purchasing new computer games or DVDs. Save money on clothes by shopping at thrift shops or clothing exchanges instead of buying new apparel.

Cutting the cost of insurance and utilities will help you make room in your budget for debt repayment. You can lower the cost of home and car insurance by combining these covers through a single insurance company. If you and your spouse each own an automobile, you might cut your costs by investing in a multi car insurance policy. Save money on the cost of utilities by replacing fuel hungry appliances with energy efficient versions, turning off electronic devices at their power source and switching off lights when necessary to conserve electricity.

Creating a careful budget plan for a household will reduce financial pressure. Once you've worked out how to cover your priority expenses and pay off your loans and credit cards, you'll have greater peace of mind about your financial stability. Plan a realistic budget that leaves you with enough cash left over to enjoy affordable activities with your loved ones.