“Do I spend more than I earn each month?”
A lot of people don’t know the answer to this question. Why? Because there’s a big difference
between how much you spend each month and how much you pay in bills. Every month your
primary categories: fixed expenses and unfixed ones. A fixed expense is a predictably
like your rent, utility bill, TV streaming, student loans and minimum credit card payments.
expenses like grocery shopping, gas and online shopping.
Obviously, loans and credit cards help spread out larger purchases into manageable
bites, but it’s often difficult to picture how one big credit card bill really impacts your
The illustration below demonstrates how credit cards are fixed expenses that go up over
these often include interest payments, which can also make it difficult to eliminate the
as these payments stick around, they’re essentially a type of pay cut.
Getting a handle on how much you truly spend versus how much you earn is paramount to taking
of your debt. To figure out how much you spend each month, start with what you know. Your
credit card statements are your friend while figuring out your spending. Downloading a
can also help keep your typical spending under control and even track how your spending is
up based on monthly targets you set.
Your Spending Budget
This worksheet will help determine everything you spend money on, so you can make
decisions over your debt and maximize the potential benefits of this guide.
Select to Start Spending Budget
Step 1: Monthly Take-Home Pay
Step 2: Monthly Non-Debt Fixed Payments
These are recurring expenses that happen every month like clockwork but aren’t
handle debt and credit card payments separately. Leave fields that don’t
Step 3: Monthly Fixed Debt Payments
These are all recurring debt payments that appear on your credit report except
cards and personal loans (see below). Leave fields
that don’t apply
%% usableIncome | currency %%
Income minus fixed expenses
Step 4: Credit Card Monthly Minimum Payments
Step 5: Monthly Variable Expenses
These expenses can change month to month. Obviously, these are the hardest to
Try to find what you have spent or will likely spend in a year and average them
vacations and holiday expenses. Looking at a few credit card or bank statements
can help a
%% disposableIncome | currency %%
Income minus all expenses
Disposable income is the money you have left over after you cover necessary living expenses,
as food, shelter, transportation and healthcare. As obvious as that may seem, how much of it
actually have may not be so clear. Ultimately, it’s vital to know — or, at least,
guestimate — that amount, because you can use it to pay off your debt faster and make
financial decisions. This
worksheet should give you a good idea where you land.
If you have little to no disposable income, you have two primary options.
The first option is to increase your income. You don’t necessarily need a different
but side gigs can help, such as ride hailing or picking up food service or grocery shifts.
situation may limit this option, but if you’re able, it can be a good way to get you back on
track and add some financial stability to your life.
Another option is to cut back on spending where possible. If you know there are
you splurge, you may want to dial them back for a while so you can move ahead. Here are some
techniques to reduce spending easily:
- Audit your subscriptions and determine if you can pare back on magazines, music services
media accounts, such as Netflix. Look into splitting the cost with friends or find free
If you don’t, cancel them — this is cash that can go straight to ending debt.
- Instead of grocery shopping when you’re hungry, plan your meals ahead of time. That way,
buy ingredients you can use again and again so less goes to waste. Use leftovers or meal
lunch instead of dining out.
- Make use of loyalty cards and coupons. Sign up for rewards programs at stores you visit
frequently and check out coupon apps, such as SavingStar.
One of the most important considerations
when making adjustments to your finances is to
figure out how to make the minimum payments at least. If you don’t have or can’t earn enough
flow) to make that happen, it will be difficult to find a repayment strategy that doesn’t
form of debt forgiveness, which can impact your credit score negatively.