Create a budget

Part 5 in a 12 week series on debt recovery

Woman looking at a credit card

Now we begin to organize your finances!


Make sure you start holding onto every receipt, bill, paystub and invoice you produce throughout the month. During the last week of each month, 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? (Expenses that don’t change each month.)
  • How much are my monthly non-fixed expenses? (Expenses that might change each month.)


Now that you have the numbers in front of you, work on creating a budget.

First, designate the necessary funds for your fixed expenses. These expenses don’t change each month, so just add up your total expenses and subtract that from your total net monthly income.


Then, with the remaining money, determine how much you will spend in each non-fixed expense category; like groceries, clothing, entertainment, etc. The amounts on these bills can vary from month-to-month. Try to prioritize these tasks in the order of importance that makes sense for your lifestyle.


Any extra money can go towards debts or credit card balances that still need to be paid. Put your minimum debt payments in the fixed-expenses category, with another category for extra debt payments in your column of non-fixed expenses.


Once you’ve developed your budget, make sure to keep copies available for yourself to refer to.


Read the whole series: 12 weeks to a debt-free life

  1. Take stock of your debts
  2. Don’t dig yourself deeper
  3. Negotiate a lower rate
  4. Create an emergency fund
  5. Create a budget
  6. Coming Soon