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December 5th, 2010
07:01 AM ET

Budgeting When You're Broke

From finance expert Clyde Anderson:

In a challenged economy it can be hard for many to make ends meet, so sticking to a budget or even having a budget becomes unrealistic. People often throw their hands up in defeat when it appears they don’t have enough to take care of the necessities of life. The interesting thing is that if you do take the high road and face your financial situation head on, you are more likely to overcome the situation instead of allowing the situation to overcome you. Many of us have been broke - translation: lacking funds to cover the necessities. In those lean times you learn how to stretch a dollar, but you have to have a plan and be prepared in order to succeed. I know it sounds far-fetched that I can be broke and still have a plan for my finances. The thing is, this is the time a plan is needed more than ever.

5 things you can do to assist with building that budget when your broke:
Avoid immediate danger by contacting your creditors before they contact you
Review credit card payments so you know exactly how much you owe
Prioritize your bills – Understand that everything won’t get paid, but the most important must be paid first
Ignore 10% savings rule – It doesn’t make sense to save 10% if you’re paying 20% in interest
Eliminate unnecessary expenses – Begin to cut back on things you won’t miss
By following these five basic steps, you are on you way to making a dollar out of 15 cents.

Look for Clyde Anderson's Home School segments in the 6 o'clock hour of CNN Saturday Mornings with T.J. Holmes.

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