Monday Money Sense- Step Two of Getting Out of Debt.

Last week we discussed becoming honest with ourselves about how much money is coming in and going out. Today we will move on to steps two and three.
Step Two-Establish a Budget
During last week's exercise, you laid the foundations for creating a budget by looking realistically at your income and expenses.Using that information you can now create a budget.

• Go here for a simple printable budget worksheet in pdf format. You can also choose to create your own on a computer program such as excel, or search the internet for other templates.
• Choose a time period for your budget (weekly, monthly, bi-monthly). I like doing a monthly budget, but you can choose whichever is easiest for you to realistically track based on your pay schedule and/or bill schedule.   
• Fill it in using the information you gathered from last week (and taking into account any changes you've made or want to make in your lifestyle since doing the exercise last week).
• Use it as a guideline for purchases/bills throughout the week throughout the week.
• At the end of your specified time period, evaluate your budget. Did you spend more than you budgeted in certain areas? All areas? Did you spend less in a certain area? Several areas?
• Use what you learned to create your next budget. Remember though that you can only spend as much as you make. 

One tip I have is budget money for fun things. It is hard to feel successful about getting out of debt if you feel like you never get to do anything fun. It doesn't have to be a lot of money. Even $10-$20 can be enough money to do something fun (picnics and parks anyone?), it may not be what you currently are accustomed to, but remember you are now living within your means and changing your spending habits.

I hope you'll take some time this week to create your budget if you don't already have one or tweak your budget if you already do . Join me next week as we create a debt pay down schedule.