Playing the numbers
Now it’s time to assess your financial situation. Before we start adding and subtracting totals, compare your “needs” total to your “extra” total. Which one is larger? Your “needs” total should be significantly larger, since it will include the “big ticket“ items like rent, utility bills, and medical expenses. If this is not the case, then you may need to reassess your “extra” expenses in order to make your financial situation more reasonable for your income/lifestyle.

Subtract the “needs“ expense total from the “income“ total. Hopefully, you will have a positive number, leaving you some “flex” room for your “extra” category and debt payment. Set those numbers aside for a moment and let’s head over to the “extra” category.

Extra, extra
Ah, the “extra” category, the most controversial category on the planet. If you’re one of the many that has a total for “extras” that exceeds your “needs” category, then some major changes need to be made in order to move into a positive direction for you to pull yourself out of the red.