A well designed budget is an essential debt management tool. (And  by well-designed I mean one that won’t leave you wearing burlap sacks and one that you can reasonably hope of sticking to.)

Excessive spending is what gets a lot of people in over their heads in the first place. Most Americans facing bankruptcy would not be able to point to specific big-ticket purchases that made their financial house of cards collapse. Instead, a lot of relatively small financial leaks end up sinking their ships. Think of $80 dinners out on the town, a $50 shirt here and there, one too many trips to Starbucks and you’ve got a recipe for dinero disaster.

A good budget can help you plan how much you can afford to spend each month towards paying off your credit cards and other bills and it can help you find more ways to save. More than anything else, a budget makes you think about each purchase in the context of your overall financial plan.

However, truly understanding how budgeting works isn’t always easy.  This week’s Required Reading provides some assistance, in the form of our chosen book,  The Budget Kit: The Common Cents Money Management Workbook.

Personal finance guru Terry Savage (author of The Savage Truth on Money) says “I recommend The Budget Kit over other budget books because it doesn’t just give you blank spaces to fill in. It really explains the hows and whys. Even if you’re already in debt it can help you pay off those debts when you know where the money is.”  That’s pretty spot-on.

So if you don’t already have a good budget plan, invest in this book and watch those debts die.