Basic Budget – Prep for Budget

If you’re still here and working your plan to reduce your debt, awesome. Lots of people ‘talk’ about it, but very few ‘do’ something about it. I’m glad to think you’re a doer 🙂

So by now we’re getting entries in our pocket notebook, recording each and every purchase on each and every day. We also have a prioritized list of categories containing all our existing debt.

Now things get a little bit harder. It would be awesome if you had no mortgage or rent and didn’t have to pay monthly utilities, etc. I’m guessing that’s not the case. You have to pay your existing bills and at the same time pay down the debt. It’s not going to be easy and no, I’m not going to write about transferring debt to different cards or some other ‘trick’. The only trick is discipline and the willingness to work your plan.

KISS

In keeping with the KISS principle, let’s start with 2 lists.

List one contains all incoming money. This includes salary and any side hustles you may have. If it’s money coming in, then it gets an entry in this list. Let’s call the list ‘Income’.

List two contains all outgoing money. Take your time here as you will need to cover all things you spend your money on. Here’s a basic starting point. Mortgage, car loan, gas, electric, water, sewer, trash, telephone, medical insurance, home insurance, food, gas (auto), insurance (auto), savings, retirement, clothing, entertainment, etc. This is not an exhaustive list and all these examples may not relate to your situation. The point is to take your time and write down each (oh yeah, don’t forget those streaming services). One thing that may be helpful is to go back and look at each of your credit card statements. Look at each entry on there. If you dine out and use your credit card, record those as dining. Be sure to check your bank statements as well. You may have a debit card linked to your checking account. Look at each of those entries as well. When you’ve finished with all this, you’ll have your second list. Let’s call this ‘Expenses’.

Lather/Rinse/Repeat

At this point, don’t worry (yet) about the dollar amounts for each. The focus is on the two lists and to insure they are correct. Go over them multiple times. Are you missing anything? If so obviously go back and edit. Lather, rinse, repeat until these are accurate lists to your situation.

Please take your time with above. It’s not a race. The more accurate you are here, the more helpful it will be as we continue to address the debt situation.