College kids fall in debt. This should come as no surprise. For starters, many cannot work full-time, credit card companies solicit them aggressively, and the cost of schooling is expensive. The following is meant as a tutorial for students who need help to reduce debt.

First order of business is to list down all debts and classify them into secured and unsecured. Get their total, interest rates and also their due dates. Calculate all your income and expenses, as well, and then create a budget.

How to create a budget

What are the usual factors in making a budget?

1. House: It might be the single most expensive expense you are going to think about. There are several factors to consider in creating a budget for housing. One is if you own a home or if you are renting. If you are renting, it’s better to get housemates or even a roommate. If you’re single and you just got out of college, you might want to ask your parents if you can move back so you can save. It’ a temporary arrangement anyway.

2. Transportation: Payment on a new car costs around $500 a month – minus insurance, fuel and maintenance. If you think what you purchased is something that you can’t afford to pay anymore, why not resell it and buy a cheaper one. That, or consider taking the public transportation for a while.

3. Food: For a single person, food expenses should be around $150 a month. There are many ways to save on food like keeping coupons, shopping on sale, buying in bulk, not eating out or cooking at home and bringing lunches.

4. Utilities: Check for subscriptions or plans that you pay for but don’t use. It would save you a lot if you can roll back to basic services on your cable, phone, gym and other services. It’s much better if you can eliminate some of them. If you’re one to visit spas and salons, you might want to find cheaper services and if previously you don’t schedule your visits, now – you must. You have to watch out for all those expenses out of impulse. If you have vices like gambling, smoking, drinking and even drugs – you are just going to have to give them up.

5. Debt: If you still have student debt of about $20,000 plus thousands in credit card debt – you are going to have to pull all your resources towards debt elimination because you can’t really save with most of your money going to repayment.

6. Savings: This dream should be put on hold in favor of debt elimination. If you have money to spare, you can still save, but the bulk of your money must go to getting rid of debt. Also, while you are still employed be sure to contribute to your 401(k).
May Arevalo is a guest writer for Franklin Debt Relief.