Before you can even set up a budget, make plans to eliminate debt, and plan for savings; careful analysis of your current situation is required. This is a very important (and not always fun) step to undertake. If you already use personal finance software such as Microsoft Money or Quicken, you will be able to easily retrieve these items through by pulling a few reports (Income and Expense Report and Net Worth Report) . I personally use Microsoft Money, but my husband prefers Quicken. I would highly recommend picking up one of these software packages the next time they go on sale. If you don't use a package like this you can use this Budget Worksheet to document your current standing. It is good to analyze the past year of spending to include seasonal spending differences, such as Christmas gifts and fluctuations in utilities costs. In this step you will be identifying and tracking all income, expenses, debt, and savings.

You now have a picture of your current financial standing. You deserve a pat on the back. Only by knowing your real income, expenses, debt and savings can changes be made to better that bottom line (no matter what it looks like now). Don't get disappointed if your financial snap shot doesn't look very good on paper. It can't be improved without knowing what your starting point looks like. Every small or large step we make from here will be in the right direction. Just remember, every little bit helps. You will need to stay focused and motivated, without getting side tracked.