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Step 5 Toward a Debt-Free Life

This month, you’re going to organize your finances. Hold onto every receipt, bill, paystub and invoice you produce throughout the month. Sometime during the last week of May, sit down with all of your paperwork and start crunching the numbers.

When you’re through, you should have all of these questions answered:

How much is my net monthly income?
How much are my monthly fixed expenses?
How much are my monthly non-fixed expenses?
Now that you have the numbers in front of you, work on creating a budget. Designate the necessary funds for your fixed expenses. Then, with the remaining money, determine how much you will spend in each non-fixed expense category; like groceries, clothing, entertainment, etc.

Put your minimum debt payments in the fixed-expenses category, with another category for extra debt payments in your column of non-fixed expenses.

Previous: Step 4 Toward a Debt-Free Life
Previous: Step 3 Toward a Debt-Free Life
Previous: Step 2 Toward a Debt-Free Life
Previous: Step 1 Toward a Debt-Free Life

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