Unexpected expenses, impulse purchases, and lack of expense planning. This tripod lists some of the top threats to your budget. When expenses go out of control, often the choice is to take out a loan. But when that does not even work and we lose control, the question arises: how to get out of debt once and for all?  

1. Know how much you should:

1. Know how much you should:

To attack a problem, you need to know its real dimension. List all your debts, no exceptions. Contact each of the creditors and inform yourself of the amount for each of them to be paid in cash.  

2. Review your monthly budget:

2. Review your monthly budget:

You have to cut the evil at its root. It is no use taking out loans to take out accumulated debts while you are still creating new debts every month. Map all your expenses and revenues (with the help of a spending spreadsheet or Werther, a financial control tool that pulls your bank moves automatically).  

3. Create spending goals:

3. Create spending goals:

Knowing exactly how much you spend on each of your expenses, it becomes easier to know where you need to work harder. Create spending targets by following the 50-15-35 rule:  

50% of the income for essential expenses: all those necessary for you to keep up with on a day-to-day basis: Housing, food, transport, education and health expenses are examples.  

15% of income for financial priorities: those who are indebted must have as priority the discharge of their debts with that portion of income. When debts get in control, it’s time to think about saving and investing.  

TIP: If your debt amounts exceed 15% of your income, the criterion for balancing expenses is first to review your lifestyle expenditures and then, if necessary, the essentials. In practice, this means that if your debts take 20% of your income, for example, lifestyle spending should account for 30%.

35% of income for lifestyle: all expenses related to hobbies and leisure: gym, beauty salon, courses, restaurants, parties, purchase of clothes.  

4. Renegotiate your debts:

4. Renegotiate your debts:

Knowing how much you owe and stagnating the budget bleed that resulted in increasing debt accumulated every month, you will have all the tools you need to propose a new agreement to your creditors. Do not accept the first proposal! If you pay cash, negotiate a good interest discount. If you are going to pay, pay attention to the installments to fit your monthly budget. The Central Bank Citizen’s Calculator can help.  

5. Do the following:

5. Do the following:

It is important to commit to following what you have promised both to lenders and to yourself. Control your monthly expenses so they do not get out of the line and pay the renegotiated installments on time. Thus, you will regain the trust of financial institutions for your future financial projects.