Getting Out of Debt_1 in Three Steps: Know Where You Are

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Getting out of debt_1 requires three steps: Know Where You Are which we have already covered, Find Where You Can Save and last but not least, Build Your Security and Wealth. Hopefully, you did the budget spreadsheet and calculated your net worth. If not go back to the first step or I will give you another way of doing the budget right here, right now.

I found something for you that may be easier to do the budget spreadsheet and net worth so let’s go to the budget calculator right now. Where you see the monthly expenses, scroll down to see the different items for the budget.


The first one is Rent or Mortgage. Go ahead and write the monthly amount you pay for it. Then do the same for: home insurance, car payment, car insurance, health insurance. Electric bill, gas bill, phone bill, cable bill, Internet, credit card payments, Cash withdrawn and there are two items called Other for items that do not fit in the list. Anywhere where you do not have a figure for, enter zero (0).

Next, enter the extra expenses that you can anticipate for each month, birthday and Christmas gifts, IRA contributions, repairs or replacements like a stove for instance. Anywhere where you do not have a figure for, enter zero (0). The monthly calculation will be done for you.

This time, enter your income for the year including the salary, interest income, bonus and investment income. The calculator will calculate the monthly income. Enter the yearly income in the fields below. Anywhere where you do not have a figure for, enter zero (0). Now click submit. The next page will summarize your monthly income and expenses.

It will be something like this:

Monthly Budget Summary
Monthly Expenses$2484
Average Monthly Expenses$50
Monthly Income$2233
Monthly Budget Summary-$301

Most of us do not know how much we owe from month to month unless we do a budget and adhere to it the best way we can. As you can see with the example above, there is a monthly shortfall of $301. Every time that Monthly Budget Summary number is negative, that means we are spending more than we earn.

So we have to find something in our expenses to reduce to get us to the positive territory. How do we do that? By printing the numbers we entered and going over them with a fine toothed comb. Which one can we cut? And while we are at it, let us figure out how to give ourselves a 10% increase by cutting our expenses by 10%.

As you can see, we are still on the first step, but it is okay because we cannot really go ahead without completing this stage for the only way we can have a brighter financial future is if income and expenses or money that comes in and goes are clear in our mind.

If you are still not comfortable with the interactive worksheet I found for you, perhaps you will like this better: The Budget Kit: The Common Cents Money Management WorkbookPersonal Finance Books)

And it does not really involve that much of a sacrifice; we just have to use our God-given talent and use that grey cell to our advantage. For example where I live, there is an entertainment complex called Ontario Place that will give free entrance for the whole year. You can really have lots of fun there without breaking your budget. So now hopefully, we can move out of this stage for getting out of debt_1.

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