Step 3: set your budget

Here is where all that marinating from day 1 comes into play.

If you did not research budgeting 101, then please stop reading this immediately and go back to your books and websites.

If you feel you have a firm grasp on the basics, then please enjoy my 3 step version:

  • Look at your take home pay each month
  • Write down all your bills (rent/mortgage, utilities, phone/cable, etc)
  • Determine what you need each month for gas, food, etc.

Hopefully, all your bills and needs are less than, or exactly the same as, your monthly income.

If not, well… I think it’s time to seriously reconsider your life style.

Now that you’re either celebrating living within your means or mourning your reckless rock star life (it’s OK, I’ve been there!), it is time to karate chop your total from above in half. That way you know exactly how much you have each paycheck to spend on food, gas, etc.

The hubs and I came out with $400 to spend on gas, food, and fun each paycheck. GULP! We are officially paupers.

**PLEASE NOTE: If you have two incomes, decide if you are going to live on both or just one. For the sake of paying off our debt rapidly, we decided to make our budget only on my husband’s. My income is dedicated to paying the monthly payments of all our loans, saving a little, and paying extra on the loan principles.

So really, we are choosing to be paupers.

We’re idiots.


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