How Do I Budget?

Budget. The word alone sends chills to many people. Here are some things that people equate with budgets.

Budget = Restricting

Budget = I Am Broke

Budget = Controlling

Budget = No Fun

Budget = Constricting

Budget = Not going to do it!

Most people have tried budgets … and failed! It was a bad experience, and many will say that they aren’t EVER going to budget again.

Couple working on budget

I want to make a deal with you. How about reading this post, trying for just one month this method that I will teach you? Just give it one shot. Just one. My hope is that you will try a budget for the next month.

I am going to share with you the exact process that Jenn and I took to prepare a budget that works. Guess what? THE VERY DAY that we started budgeting was THE VERY DAY that we started WINNING WITH MONEY!

Some might say “I hate budgets” and “I don’t need no stinkin’ budget”, but I would ask them the following questions:

  • How are you paying for Christmas this year? I am paying cash.
  • How much is your car payment? I paid cash for my car.
  • How much did you invest this month? I have invested for retirement for 287 months in a row and my kids’ college since February 2002.
  • How much money do you owe to your credit cards right now? I owe $0.
  • When is the last time you had a great discussion on finances with your spouse? Not a fight. A great discussion. Jenn and I develop a spending plan TOGETHER every single month.
  • If your car broke down tomorrow, do you have money in the bank to pay for it? Car repairs are not financial emergencies. I am not surprised when my car breaks down. Why? There is a car repair joint on every corner of every street of every town and city in the country! It is normal for cars to break down!

At the end of this post some might call me crazy, some might call me insane, and some might call me a wacko. I would say to them – call me whatever you want, just don’t call me broke anymore!

You see … I Was Broke … Now, I’m Not!

In reality, a budget is nothing more than telling your money where to go. I have heard Dave Ramsey take the definition a humorous step further – a budget is nothing more than telling your money where to go instead of wondering where it went!


So, our first step in budgeting is:

STEP ONE – Understand that budgeting is nothing more than “telling your money where to go.”

Step One is the largest hurdle of any part of budgeting. The rest of budgeting is a breeze once you understand what a true budget is. Once you have internalized Step One, it is time for Step Two.

Budget with notes of modifications to be made

STEP TWO – Determine the income (take-home pay) you will receive during the NEXT month.

There is a very key word in Step Two – the word “NEXT”. I have learned that preparing a budget for money that has already been spent is not very fruitful. It is like being a Monday-morning quarterback for your finances. You want to get that money back. You wish you could have that money back. But it is GONE!

The budget must be completed BEFORE the month begins and BEFORE the money ever arrives. You are developing a spending plan for your money BEFORE you ever get it. The only way I have found to stop saying “I can’t believe I spent my money that way” and “I wish I could have that money back” is to develop a spending plan BEFORE the money was paid to me for the month.

So, think about it. What income will you receive during the next month?

Here are some common ways that people receive money during the month.

  • Paycheck
  • Bonus
  • Side Job Income
  • Child Support
  • Alimony

Whatever your source of income is, write it down. In fact, write it down and put the dates that you will be paid this money during the next month. If your income is unpredictable, write down the amount of money that you can count on.

If you have at least one month’s worth of expenses in the bank, download the [Monthly Budget].

Monthly budget form showing income

Because you have at least one month’s worth of expenses in the bank, you can sum up your total income and enter the total income in the Income section at the top of the budget form.

If you are living paycheck-to-paycheck, download the [Weekly Budget].

Weekly budget template

Because you cannot pay all your bills at the start of the month, you will need to develop a budget for each individual paycheck. Make the dates at the top of the budget form match up to your income dates and enter the income in the Income section at the top of the budget form.

This income is what you will be spending on paper BEFORE the month, the money, and the bills ever arrive!

STEP THREE – Enter all of your expenses for the NEXT month.

This is where you spend your money on paper! In Step Two, you determined your total income for the next month, and it is now time to spend it on paper BEFORE the month arrives!

These expenses are the real, actual expenses that will happen. I have seen many people include average expenses for the year. Averages don’t work!!! Enter the real expense because this budget needs to be highly relevant to the next month!

If the expenses are not relevant to the next month, it is highly possibly that you will consider the budget irrelevant for the next month!!!

If you don’t know the ACTUAL cost (utilities, gasoline, etc.), enter an educated guess based on recent spending.

Enter all of the expenses into your budget. You can obtain your FREE COPY of budgets by clicking TOOLS at the top right-hand corner of the page.

The budget form has some excellent features built into it.

  • If OUTGO exceeds INCOME, the TOTAL will turn RED and tell you how much you have overspent!
  • If INCOME exceeds OUTGO, the TOTAL will turn YELLOW and tell you how much more money needs named!
  • When INCOME = OUTGO, the TOTAL will turn GREEN … This is the ultimate goal!

Even if the budget TOTAL turns RED, keep typing in the expenses that you know are going to happen in the upcoming month. The goal is to get all of the known expenses for the next month on paper.


YES, you will later have to remove some expenses or boost your income to get to GREEN, but the goal right now is to get all of the expenses into the budget form! By having all of the expenses in the budget, you can make a much more informed choice on what will be removed from the budget.

Click on the HERE to see an example budget with all of the expenses loaded.


Your income is limited. If you bring home $3,000 during the next month and spend $3,320, your spending plan will not work! Where will the $320 come from? It will have to come from savings OR from debt – usually in the form of a credit card.

Budget that is not balanced because outgo is more than income

YOUR INCOME IS LIMITED! Let me take it one step further. Let’s say you are really blessed and bring home $70,000 during the next month (don’t laugh – many people do!). If you spend $71,320, your spending plan will not work! The $1,320 will have to come from somewhere – and many times it is made up with debt.

In STEPS TWO and THREE, we entered all of the income and expenses into the budget and, no surprise, the OUTGO exceeded the INCOME. You can see the entire budget HERE.

There are two options when the OUTGO exceeds INCOME:

  1. Increase the INCOME – 2nd job, Overtime, side job
  2. Decrease the OUTGO – Decrease the expenses

In this budget, let’s say that this family receives salary. They cannot quickly increase their income, so they are going to focus on reducing their outgo! They need to eliminate $320 of spending.

NOTE: This is not a “perhaps, perhaps, perhaps” type budget! This is how the family will ACTUALLY spend their money next month! Remember – if your budget is not 100% relevant to you and your family THIS MONTH, you will ignore the budget and use it to start a fire in your fireplace!

What expense can they eliminate? Again, you can pull up a copy of the budget HERE.

After working together on their budget, the family decides on the following changes.

Chart showing monthly expenses with the previous amount budgeted, new budgeted amount and the change made in order to bring the overall budget into balance


If you want to see the entire EXACTLY ZERO budget, you can view it by clicking HERE!

You might be saying, “These people are CRAZY! They cut out 1/2 of their dining out, entertainment, blow money, and all of their babysitting money! They are crazy!”

I would say – “NOPE, they have had enough. They are so sick of living paycheck-to-paycheck that they are willing to live differently and change their lives forever! All because of a little sacrifice now!”

Jenn and I prepare a written spending plan every single month before the month begins and before any of the money gets to us. This is THE REASON we have won with money.

STEP FIVE – Follow the budget!

You have followed all of the steps. You now have a spending plan for the next month. It is time to live by it! After all, it was YOU who told your money where to go! Why wouldn’t you follow YOUR plan?

As I have helped others develop their own spending plans, I have seen people completely break free of debt. I have seen people pay off their mortgages, marriages restored, and the hopeless become hopeful!

That is what your budget will allow you to do! Develop a spending plan every single month BEFORE the month and the money arrives and then FOLLOW it! You will never regret this decision.

Will this work?

Maybe you have read this post in a guarded, protected way while wondering “I wonder if this will work for me? I don’t want to get my hopes up. I’ve tried this before.” I say that YOU CAN DO THIS!!! I believe in you! Why? BECAUSE I WAS THERE!!! I had an average bank balance of $4.13 and the STRESS was awful! The shame was real. I did not know how to break free.

Joe and Jenn

Planning my spending one month in advance was what broke Jenn and I free! It will work for you too!

Why not pull up a free budgeting tool and get started winning with your money today?

If you have enough money in the bank to pay all of your bills at the start of the month, use the [Monthly Budget].

If you are living paycheck-to-paycheck, use the [Weekly Budget].

Help! I Can’t Pay My Bills

Can't pay my bills

“I can’t pay my bills!”

How many of you have said this recently?  Have you heard friend or family member say this?

couple who cannot pay their bills

Unemployment rates a skyrocketing, more lay offs are being announced daily, and pay cuts are now seemingly common.  Many people are finding themselves in a situation where they can’t pay their bills.

Before this current financial crisis 40% of Americans said they couldn’t handle an unexpected expense of $400 or more.  What do you do when the world economy is in a state of suspended animation?

This is post is written for those who are struggling mightily with their finances and tough decisions are being made about who will be paid and who will not be paid.

These practical steps and tools can help you walk out of this situation and into financial freedom.

Step 1 – Prepare A Written Spending Plan

There is so much power in a written spending plan! I never realized where all of my money was going until the day that I began planning my spending.

You might say, “But Joe, I know that I can’t pay my bills. My expenses are more than my income so why should I even bother with preparing a spending plan?”

I would respond with this answer. “It is hard to slay a dragon if you do not know how many heads it has!” A spending plan will ensure that you know the ACTUAL situation instead of the IMAGINED situation.

Prepare your plan – even if you know it is going to be awful. This is the start of your journey to financial freedom!

You can access the free budget tools HERE to get started on your plan.

Monthly, weekly, and mini budgets to help people with paying bills

Step 2 – Ask Questions

It is extremely important to ask questions that help define the true root cause of the issue.

When I am counseling someone experiencing this sort of situation, I have a series of questions I ask to help me grasp the issues. Here are some of the questions for which I am seeking answers. These are not in any particular order.

  •  “What was the cause of this situation?”

Ultimately, I am trying to determine if the current situation is the result of a long series of financial decisions or the result of a catastrophic event (job loss, medical issue without insurance, death of income provider, etc.).

  • “Is this an INCOME or an OUTGO issue?”

I want to see where the money is going. That is why Part 1 is so important. The spending plan will help you more clearly determine the answer to this question. From experience, I have seen that it is an OUTGO issue in most cases.

  • “What are the required debt payments?”

Is this unsecured revolving debt (credit cards) or is this installment debt on an asset (car, boat, motorcycle, etc.)? This question will be key for Step 3 of this post.

  • “Is there something that can be sold?”

If there are items that can be sold, this needs to be fully investigated to understand how it can help the situation. Selling something like a motorcycle can help bridge your “gap” to help you prevent racking up debt.

  • “What expenses can be stopped?”

Are there any “extras” in the OUTGO? One example of this are nonessential subscription services like Netflix or Hulu.

  • “How can INCOME be increased?”

An extra job or tons of overtime may not be appealing, but living in a squalor of debt with no hope is even worse! It is very important to investigate short-term ways to increase income to get out of the current late bill payment situation.

Step 3 – Prioritize Your Bills

When the financial sky is falling down and the walls are closing in on you, it is imperative that spending is prioritized. Here is my suggested order of priority for spending when there just is not enough to pay everything.

1. Housing

You must take care of the mortgage and utilities first. Now if the mortgage payment has run out of control and it is 60% of one’s take home pay, then it is high time that the house be sold or income be tripled within a couple of months.

2. Food & Prescription Medication

I am going to eat before one single bill is paid! We must be able to eat. I am not talking about Olive Garden or fast food. I am talking about groceries bought with coupons and much attention to frugality. Likewise, I need to make sure my family has the medication they need.

3. Transportation

If transportation is required to produce income, then it is imperative that the vehicle payments, insurance, taxes, gasoline, and maintenance be funded. If you have an expensive car payment you may need to trade your vehicle for something with a lower payment or no payment at all.

4. Back Taxes

Owing the government back taxes is a terrible thing, and it must be addressed. I would rather owe anyone besides owing Uncle Sam!

5. Secured Debts

If there is additional money remaining after housing, food, and transportation are taken care of, it is time to pay the secured debt payments. This is debt where the lender can come take something – like a car, boat, motorcycle, tractor, etc. If the lender repossesses the item, they will sell it at a wholesale auction and come after you for the difference.

6. Family & Friends Debts

If you owe family and friends, and you still have some money left, it is essential to pay on debts owed to them. Unpaid debts to family and friends have been the cause of untold relationship issues since time began. Avoid this!

7. Unsecured Debts

It is time to address the unsecured debts. Credit cards, student loans, signature loans, etc.

One thing to note is that unsecured debt holders will be screaming and hollering the loudest because there is nothing they can come take from you. As a result, they will try to play upon your emotions to get you to pay them before you pay anyone else.

And it works! I have met with a lot of people who have kept their credit cards current while letting the house payments fall behind. Not good!


Go back to the spending plan you have prepared and ensure that your priorities are in order. When you run out of money you stop paying bills. Communicate kindly with those you can’t pay at this time that you want to repay your debts, and have a plan to do so.

Step 4 Take Action!

When you find yourself in a place where you can’t pay your bills don’t stop!

I have found that whenever I am overwhelmed, I move toward doing nothing. I just want to shut down and ignore everything. Running away feels like the right thing to do.

Yet, the FACT is that running away will just make the situation worse. Will it be extremely difficult to work through this situation? AB-SO-LUTE-LY! But the cost of NOT doing something is even more difficult! You CAN do this.

Below are some practical tips that have worked for me when I have wrestled with overwhelming situations.

  • Create an Action List of Payments

I prepare a list of items and prioritize them. Identify who you need to call to communicate that you can’t pay them at this time. All those that you are going to pay, list what actions you have to take to do so (ie what are you going to sell or what expenses are you eliminating so you have money to make those payments).

  • Establish Financial Accountability

I find someone who I trust who will hold me accountable to my actions. They can encourage you as you make difficult choices along the way.

  • Seek Help

Seek help from a financial coach who can help you prepare a budget.

We have trained over 4,000 financial coaches across the US and Canada. You can email us on the I Was Broke. Now I’m Not. Contact Page. We will connect you with a one of the churches where we’ve trained coaches, and they will meet with you for free.

Our counselors are winning with their money and are passionate about helping folks do the same!

“I Can’t Pay My Bills” but I CAN Do Something!

Not being able to pay your bills can feel crippling, but I want you to know that you CAN help your situation.

Let’s review our four steps .

First, write it down so you know what situation you are actually facing, instead of what you imagine you are. Second, ask yourself those six questions. Third, prioritize your bills in order to figure out who will be paid and who can’t be. Finally, take action!

We want to be able to help you along the way. Visit our Next Steps and Tools pages on our website for free resources to equip you on your journey.

By identifying your gap and taking action it will allow you to maximize the dollars you do have and minimize how much you spend. These actions will enable you to prosper on the other side of this. You can do this!

Help with paying bills for people affected by COVID-19

For more resources to help you with your finances during the COVID-19 pandemic visit our website.

Should I Have a Credit Card?

Should you have a credit card? Some people say “yes,” while others are completely against them. So, what are you supposed to do? On today’s episode of the Monday Money Tip Podcast, we’re discussing the pros and cons of each side. If you have questions about credit cards, make sure to check out this episode. In our Current Money Events segment, we’re talking about spending money on pets. How much should you spend and are you spending more than the average person? Our success story comes from Casey, who is currently on Rung #5 of the I Was Broke. Now I’m Not. Ladder!! 

Find more episodes of the Monday Money Tip Podcast HERE. Please let us know what you think by leaving us a rating!

Email to ask questions or share success stories.


About the Episode: 

  • Today, we’re answering: “Can you share your thoughts about credit cards? I have been listening to Dave Ramsey, and he is really against credit cards. However, most people have credit cards.”  
  • In our Current Money Events segment, we’re talking about spending money on pets. How much should you spend and are you spending more than the average person? 
  • Our success story comes from Casey, who is currently on Rung #5 of the I Was Broke. Now I’m Not. Ladder!!  

20-Day Savings Challenge
Next Steps: Banking
ARTICLE: Pet Industry Market Size & Ownership Statistics
0% Balance Transfer Credit Cards
TOOLS: Budgeting 

Verse: “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.” Romans 13:8 (NIV)

Related Monday Money Tip Podcast Episodes:
Episode 18: How to Pay Off Debt Quickly
Episode 28: 8 Ways to Speed Up Debt Elimination
Episode 63: 0% Balance Transfer Credit Cards
Episode 81: How to Prevent Overspending 
Episode 83: Money Saving Tips

“No” Allows You to Say, “Yes”

Happy Monday Everyone! Another episode of the Monday Money Tip Podcast is LIVE! Do you find it challenging to follow a budget because you feel like you’re constantly having to say, “No!” to yourself – and the rest of your family? On today’s episode, we’re addressing this feeling and how saying “no” now can help you say “yes” later. In our Current Money Events segment, we’re talking about the turmoil of the stock market and what you should do. Our success story comes from Emory, who is debt-free except the house and only 2 years away from being completely debt-free!   

Find more episodes of the Monday Money Tip Podcast HERE. Please let us know what you think by leaving us a rating!

Email to ask questions or share success stories.


About the Episode: 

  • Today, we’re answering: “Following a budget is really difficult because I feel like I am constantly having to say, “No!” to myself – and the rest of my family. Can you help me address this feeling?”  
  • In our Current Money Events segment, we’re talking about the turmoil of the stock market and what you should do. 
  • Our success story comes from Emory, who is debt-free except the house and only 2 years away from being completely debt-free! 

20-Day Savings Challenge
0% Balance Transfer Credit Cards
Next Steps: Banking
Financial Learning Experience 
See Our Team Live
TOOL: Debt Freedom Date Calculator 
VIDEO: Paying Off Debt with Debt Snowball
20/20 MONEY: Gaining Clarity For Your Financial Future
Latte Factor – By David Bach
TOOL: Monthly Investment Calculator 
TOOLS: Budgeting 

“If you don’t sacrifice for what you want, what you want will become the sacrifice.” – Unknown

Related Monday Money Tip Podcast Episodes:
Episode 03: Making Savings A Priority
Episode 07: How to Teach Your Kids About Money
Episode 18: How to Pay Off Debt Quickly 
Episode 27: Sustaining Goals
Episode 63: 0% Balance Transfer Credit Cards
Episode 81: How to Prevent Overspending 
Episode 83: Money Saving Tips

March 2020 Update From I Was Broke. Now I’m Not.

Do your finances cause you frustration, fear, and anxiety? Discover how you can handle financial anxiety and become more comfortable dealing with money.


DEBT!!! Is it all equal? Are there different kinds of debt? What type of debt should you avoid, and is there any debt that’s ok to have? Everyone has a different opinion, so we’re breaking it down for you.


Are you making progress when it comes to budgeting, but then something happens that blows up your budget? Discover how to prevent issues from messing with your financial progress.


We’re sharing all our money saving tips. If your monthly budget is tight, this is for you! Check out ways you can save money in your budget now!



If you still need helping creating this month’s budget, check out our free budgeting tools HERE.

Don’t forget these expenses in your budget:

  • St. Patrick’s Day
  • Spring Break
  • Easter
  • Taxes
  • New Clothes for Warmer Weather
  • Outdoor Activities
  • Yard Upgrades [mulch, plants, patio furniture]
  • Christmas 2020
  • Summer Vacation Savings