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Household Budget | How to Use
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What this tool does
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Your household budget is where your debt payoff plan gets its fuel. It shows you exactly how much money comes in each month, where every dollar goes, and how much you can free up to attack your debt. Build it once in full detail, then check it each week as the month unfolds.
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Account for every dollar
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This budget asks you to list each account on its own line, not a rough total for a whole category. Enter each utility, each insurance policy, each card, and each subscription separately. It takes a little longer the first time, and that is the point. You cannot decide whether a dollar is worth spending until you can see exactly where it is going, and a single account is often where the easiest savings hide.
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The three columns
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Every line has a Budget, an Actual, and a Difference. Budget is your plan for the month. Actual is what really happened. Difference shows the gap. For income, a positive Difference means you earned more than planned. For expenses, a positive Difference means you spent less than planned, which is a good thing.
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How to fill it in
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• Fill in only the gold cells. The grey cells, including every subtotal and total, calculate on their own and are locked so a formula can't be deleted by accident.
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• Work down the page: income first, then each expense category, entering every account on its own line. Each category subtotal adds up for you and carries to the totals at the bottom.
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• Enter each card and loan minimum on its own line under Minimum Debt Payments. These match the debts in your Debt Stack Calculator.
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• Use the write-in 'Other' lines in each block for anything not already listed, so nothing gets left out.
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• Adjust until the Difference at the bottom reaches zero. That means every dollar has a job, which is the goal of a zero-based budget.
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Your extra debt payment
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Whatever is left after your living expenses, your minimums, and a small amount of savings becomes your Extra Debt Payment. That is the single most important number in this tool. It is the amount you will enter in the Debt Stack Calculator to build your payoff plan and put the rollover to work.
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Turn a good month into faster payoff
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Your plan sets a steady extra debt payment, and that steady number is the one you enter in your Debt Stack Calculator. Some months your variable spending will come in under what you budgeted. When it does, the Month-End Result at the bottom shows that surplus and adds it to your plan, so you can send a little extra to your target debt that month as a bonus on top. A tight month works the same way in reverse, showing you honestly where you landed. The steady plan keeps your payoff timeline predictable; the bonus months get you there even faster.
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Make it a weekly habit
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A budget you build once and never open is just a document. Spend about ten minutes each week updating the Actual column, comparing it to your Budget, and adjusting the rest of the month if a category is running high. That small, steady habit is what keeps the plan working in real life, not just on paper.
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Richard Gorham | Leadership-Tools.com | 10 Steps to Conquer Debt
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