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One will find at least one credit card in American household. These days carrying debt has almost become inevitable and in many households, is necessary. Most of the cases sound financial budget is forgotten. In between credit cards, mortgages, carloans, retirement funds, many of the Americans have no time to even ponder what to do next. The ever-growing debt consumes the largest chunk of their incoming resources. All said and done, a sound financial budget can be daunting for every person who is burdened with debt but not at all impossible.

The very first thing is to know how much debt is there with a person and how much is too much for him. Generally speaking, if more than 20% of the take home pay is going towards non-housing debt and rent or mortgage exceeds 30% of take home pay, then the person is overextended. In such case one must immediately take recourse to financial budgeting.

There are number of steps one can follow to establish a sound financial budget and eliminate debt. One need to adjust his spending habits to work out of debt trap and establish a sound financial budget.

The first key to establishing a financial budget is to find out where your money is spent . This will allow identification of debt load, and may help to free up some cash towards the debt. Next thing to do is to track the expenses for 30 days by writing down what is spent . The ATM slips to be kept and written over it the expenses incurred till the cash is exhausted. Credit card slips to be kept and added to the total expenses. Fixed expenses like housing , groceries, electricals, water, cable and phone bills to be added . The next come the non-essentials like entertainments, restaurant bites, clothing's, and things of that nature.

Analyze the expenses where one can reduce the spending. One may cut some phone bills. Why not carry lunch to workspot to avoid outside food bills. Why not make coffee or tea in home and carry the same in a thermos to work. Adjust the thermostat seasonally to reduce electricity and heating costs. The objective is to reduce current spending so as not to add to the debt. All these could be a decent sum in freeing the debt slowly but steadily. That is how the foundation of a financial budget is laid

Once you have taken the initial step to lay down your financial budget , the next step is to attack the existing debts with the following steps:

' The high rate cards are paid off .

' To transfer the high rate debts to a lower rated card.

' If at all anything is borrowed , it should be for long term and financial things that gain in value like a house, education or home appliances that is supposed to last long and will be around when the debt is paid off fully.

If these steps are followed , one can create a sound financial budget and decrease the debt . The key to financial budget is analyze spending , controlling expenses, establish a plan and follow it, and lastly reduce the debt load duly .