Step 3: Take Inventory of Debt and Review Financial Position

When you are experiencing a bill-paying crisis, it can be depressing to think about how much or how many people you owe, but it is essential that you take an accurate inventory of your debt. Now is the time to open that stack of bills sitting on the kitchen table and, if you need to, call your creditors to verify your current balances. Once you have up-to-date information, fill out the Debt Worksheet.

Cash Flow Summary
If you have found ways to increase your income and/or reduce your expenses, you should be in a better position to pay all of your bills. But how do you know if you have done enough? Subtract your monthly expenses and debt payments from your income, reflecting what changes you think you can realistically make in the near future. (E.g., if you are currently spending $3,000 a month, but are fairly confident that you can bring it down to $2,500 a month, use $2,500.)

Total monthly net income  
Total monthly expenses
Total monthly debt payments
Monthly surplus or shortfall =

If you have a surplus, you are in good shape. If you have a deficit, look over your budget again and see if there is anything else you can change.

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