Free credit report repair is simple. It’s simple, but not easy. Once you have checked that your report is accurate, you will need to rethink some aspects of your lifestyle, especially around how you spend money.

The way to repair your credit is to start to have a good credit history, making payments regularly, slowly but steadily reducing your debts, and not taking out a lot of different loans. This requires something that many people would prefer to avoid; budgeting.

If the very idea of setting a budget turns you off, you are not alone. However, once you have done it, you will find that living within a budget is amazingly empowering. You will no longer have to worry about money because you will know exactly where you are. You will not find nasty surprises waiting in your mailbox, or debt collection agency men at the door.

So here’s how to do it, step by step.

1. Write What You Spend

For at least one week before you set your budget, write down everything that you spend. You don’t have to include regular bill payments, but any cash that you spend and any time you use your cards in a store or a gas station. You can do this in the back of your diary. Don’t miss anything.

You will probably find that just knowing that you have to write it down helps you to think twice before you buy anything that is not necessary. You can save a lot of money just by doing this. Consider buying a small notebook and continuing this to help you keep your expenditure low.

2. Estimate Your Fixed Expenses

Work out approximately what your unavoidable expenses will come out to over a year. This should include rent, insurance, electricity, taxes, loan payments, and also things that you might have to take a guess at, like household and auto repairs. Don’t include anything that is covered in #3.

When you have the annual total, divide it by 12 for a monthly total. This is your monthly budget for those items.

3. Set An Amount For Your Flexible Expenses

Flexible expenses include food, clothes, gasoline, haircuts, entertainment, furniture, gifts, etc. Now clearly some of these are necessary expenses, and you cannot cut them out. But we call them flexible expenses because unlike the bills in #2, how much you spend on them is within your control.

First, set a monthly budget for the larger expenses that you will not have so often; clothes, furniture, vacations etc.

Then, set a weekly amount that will cover food, gasoline, entertainment and anything else; your spending money. This should be the lowest amount that you think you can manage on. Multiply this by 4.25 to get a monthly figure. (Yes, there are 4.25 weeks in a month; not 4!)

Click on to Part 2 of this report for more free credit report repair tips and the most important part; how to stick to your budget painlessly!