Hi, everyone! Today, we are starting a series called “The Basics”. This 4-part series will allow anyone to take control of their finances and get on the path to debt freedom and wealth building.

If you’ve read our story, then you know we started our financial journey shortly after Dj’s mother passed away and we realized we didn’t have enough money to get to the funeral. No one ever explained to us how important assessing your financial situation is.

This would have been a helpful thing for us to learn before getting married. We also didn’t have any good financial role models, so we figured everything out along the way. Now, we are finally at a point where we can share what we’ve learned! 🙂

Part 1 of this series will be all about assessing your financial situation. You can’t make a plan of action for your future if you don’t know where you currently are. This process will work for couples, singles, young and old!

We are going to make this extremely easy for you and just give you our budget tracker for free. All you have to do is download it and input your information into it.

Get Your FREE Budget & Debt Tracking Spreadsheet!

Now, let’s get started!

What you’ll need:

1.  Our Budget & Debt Tracker (I know you’re probably reading this on your phone but we’re about to do some major work)
2.  Login information for all of your bills and debts
3.  Pay stubs (if your pay varies, use a 6 month average of your pay)
4.  Partner (if applicable)
5.  Your favorite “Get to Work” playlist!

Determine Your Total Income

You’ll want to use your after-tax pay. This is where your pay stubs will come into play. Don’t forget to include ALL of your income from side gigs, social security, child support, allowances, etc.

In the income section of the tracker, put the monthly after-tax incomes for your household in the column labeled “budget“.

Identify All of Your Fixed Expenses

Fixed expenses are things that do not change from month to month. These expenses include (but are not limited to): housing costs, utilities, insurance, etc.

Remember, your billing statements will provide you with all of the information you need.

Input all of your bills & utilities under the “budget” section for that category.

The example below shows some information in parentheses for each item which is the (date-method of payment). Since all of our bills are on autopay it helps to know where and when the money will come out. You can do what makes your life easier.

Identify All of Your Variable Expenses

Variable expenses vary from month to month. These involve costs that you typically have direct control over such as food, gas, clothing, entertainment, etc.

If you use your debit or credit card for most of these expenses you can review your statements to determine a monthly average. (Some banks make this step easy and will actually allow you to generate an “expense report” online for FREE!)

For this step, it’s important for you to be honest and write the actual amount you normally spend instead of what you “think” you spend or “hope” to spend in the future.

Input all of your Variable Expenses under the “budget” section for that category.

Identify All of Your Debts

Although I believe that debts are a fixed expense (as in you should at least pay the required minimum each month) I know that most people feel these expenses are negotiable. So, for the time being, let’s keep them separate.

Student loans, credit cards, auto loans, personal loans, and taxes are all debts so be sure to identify the initial/current balance, interest rate (ex. 18%), monthly/minimum payment and payment date. These figures will come in handy when you’re creating your debt payoff plan.

Fill in all of  the Debt Payments sections shown below. I’d recommend that you put the debts in order of the lowest to highest balance.

Calculate the Difference Between Your Income & Expenses

If you’ve input everything in our spreadsheet, it will tell you how much you have leftover at the top of the page. As you can see in our example below, we have $1,189.72 leftover to throw to debt or savings.

Don’t worry, it’s perfectly okay if you’re currently overspending. We’ll work on creating and maintaining a monthly budget in Part 2 that allows you to win and increase your leftover money.

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That’s it!!!

Not so bad, right?

If this is the first chance you’ve had to spend some time assessing your financial situation, you may be feeling a little like I was – overwhelmed.

But guess what? You just took the first step to getting on the right path to healthy money management habits and debt freedom! So, give yourself a pat on the back!!

Get ready, because your next steps start in Part 2: How to Create a Monthly Budget!

— Dannie

Were you surprised by how much (or how little) money you should have left at the end of the month? Let us know in the comments below and on social media. We’d love to hear from you!