If your finances have suddenly become troubled due to an unexpected job loss or another financial restraint, it’s important that your lifestyle changes reflect your lowered disposable income. If you have started to worry about whether you will be able to afford basic necessities such as your mortgage and grocery bills, you should sit down and prioritize your spending.
Spending prioritization may sound obvious, but the fact is that many people simply fail to take the time to establish a new budget when they start to struggle financially. As a result, their spending continues on autopilot, and their debt increases suddenly. In some unfortunate situations, this leads to families losing their homes to foreclosure. The following are some ways to budget so that you have a better chance of affording your mortgage repayments and avoiding foreclosure proceedings.
Determine your net monthly income
If you still have some dependable income, list it when calculating your net monthly income. Make sure to include things such as benefits. You may also want to calculate the savings that you have at your disposal.
Make a list of your fixed, unavoidable expenses
Fixed, unavoidable expenses include things such as your mortgage, your electricity bills, and loan repayments.
Identify any regular outgoings that are necessary
Look at your bank statements, identify the variable expenses and question whether they can be reduced or stopped. For example, consider canceling any unnecessary memberships, and think about whether you can start walking instead of using the car for short journeys to save money on gas.
Figure out your true disposable income
Calculate how much you should spend on groceries and gas every month, and deduct this from your net income along with your necessary fixed outgoings. Any money left over will be your disposable income. Consider trying to save at least a portion of this money each month to build up an emergency fund.
If you have a mortgage, you should aim to have a savings account so that you are not at risk of foreclosure if your income suddenly drops. If you are worried about foreclosure because you do not currently have an income, you should speak to your lender as soon as possible and look into the foreclosure prevention options available to you.