For years, Black women have learned to budget out of necessity. Whether being the only provider in their home or stay at home mom or just barely making enough to make ends meet, budgeting was key to survival. Not much has changed over the years, except for the cost of living and a greater debt ratio. With the rising costs of food, utilities, gas, and clothing, many are facing a financial crisis. Statistically speaking, men have a higher ratio debt than women. However, it is has been more difficult for women to get out of debt; most of the debt being credit card debt. More women use fifty percent of their income, monthly, on paying off their debt. Yet still find themselves struggling, and their debt increasing.

KNOW YOUR RESOURCES

The first important step in getting out of debt is to know and understand where you stand financially. Many live from paycheck to pay check, and really do not understand how much resources they truly have coming in or going out. Sit down with either a calculator, computer or pen and paper, and calculate how much you are actually bringing home. Look at your net pay, not your gross pay. (Your net pay is what you actually bring home after deductions. Your gross pay is what you earn before deductions.) Your next step in the process is to make a list of your expenditures.

KNOW WHAT YOU ARE SPENDING

Most computers come with an accounting/budget system that helps to calculate deductions and so forth. However, you must be honest in what you are computing! (Let‘s get real here! Include that new fabulous purse you just had to have!) However, I suggest you stick with the pen and paper when first writing down your expenditures. It’s good to have it on paper.

Make your list. At the top of the page you should have listed income and expenditures. Break expenditures into two sub-columns. The first column, list all your monthly bills. Such as: rent/mortgage, utilities (gas, light, etc,), car payment, insurance, credit cards, etcetera. In the second sub-column, list the things that you may not pay for every month, but you do spend on. Such as: clothes, shoes, hair, nails (For some, this may be weekly, bi-weekly) List it! You have to keep track of where you spend your money.) movies, books, etcetera.

Once you have finished your columns, now calculate everything. Does your expenditures outnumber your income? For most people, this is true. We often spend more than we have coming in.

KNOW YOUR CREDIT AND FICO SCORES

This is a very important piece of information to have. You must be aware of what your credit report entails. Know if the report is accurate or if there may be some discrepancies. By law, you can receive a free credit report yearly at, annualcreditreport.com. Many people will find some discrepancies within their report. So it is vital that you know and understand what is on yours.

Another key factor is knowing your FICO score. Many do not understand that their FICO score plays more of a major role in one’s financial life. The Fair Isaac Corporation determines the interest rate on your credit cards, mortgages and loans. However, many do not realize, that many employers are looking at the FICO score as well, to determine if they should hire you. (Many employers do not want to risk the hassle of having employees salaries garnished) Also, cell phone providers and Landlords also look at FICO scores to make determinations. You can get your FICO score at, myfico.com.

ESTABLISH A PLAN

Now that you know your resources, your expenditures, and are armed with the knowledge of your credit and fico scores (And you haven’t passed out!), it’s time to establish a plan. Where to begin? First things first, start paying down those credit cards. Pay more than the minimum, and pay on time. The interest rates will eat you alive. Also, stop using them. I know its hard, but if you are serious about getting out of debt and becoming financially healthy, then you are going to have to start being wise about your money and how you spend it. Cut them up if you have to! (Never cancel a credit card while having an outstanding balance. It will reflect poorly on your credit report, and cost you extra in the long run.)

A debt collector gave some sage advice one time, something you may consider. Write two checks for your credit card bills. On one, specify “for principal only“. Make sure it’s the larger of the two. On the other write, “apply to interest only”. Most people do not know that most of their monthly payment is being applied to the interest on the account, not the actual principal, which keeps the bill perpetually high (Unless you pay it all off at once.)

Spend on necessities only. Put yourself on a financial diet. When you are trying to reach a goal, you must do everything that you can to reach that goal. Keep in mind, that this is not an overnight process. It is retraining yourself to do things differently. To spend differently; to spend wiser. Go back to your list of income and expenditures. Be honest with yourself. Are there things that you can perhaps go without? Or, perhaps do yourself? Certainly there is. It’s about gaining financial freedom, and keeping it!

If you have more debt than you know how to handle, then seek out proper debt counselors. However, do not be fooled by the many organizations that promise you a quick fix. There is no quick fix to debt. It takes time, diligence, patience and a willingness to go forth. For help, seek out an approved organization that is listed with, National Foundation for Credit Counseling (NFCC.org)