Select Page

This is Rule 3 in my 10 Rules to End Your Debt and Change Your Life.

Now that you have mastered Rule 2 and dedicated a month to spending less than you earn and tracking every expense, it’s time to make a monthly debt and bills budget and live by it.

The purpose of Rule 2 was to give us some information to work with (as well as training you to live on less than you earn), and will work hand-in-hand with this Rule as we move towards our debt payoff in Rule 4.

Some of you may be wondering what the point of this step is. You might think that this is too basic or too obvious. But I’ve spent many years listening to people on radio shows who don’t know their own debt picture and don’t have a solid “homepage” for their debt.

They don’t know exactly how much they owe, and are dependent on the bills coming in the mail. They sometimes miss payments because they misplace a bill or thought that the other spouse had taken care of it.

Think of our monthly debt budget as a homepage for our debt freedom efforts.

Though it is something obvious and easy, that’s what makes it important to me. My debt budget spreadsheet focused me on my task and kept me on track each month. I never missed a payment once I implemented it and that includes the debt consolidation service we used.

So What Does Our Debt Budget Spreadsheet Do?

Having a debt and bill tracking spreadsheet does three things:

  • Compiles all your bill and debt expenses in one place
  • Helps consolidate credit card debt from multiple cards
  • Gives you a place to keep track of what has been paid, and what needs to be paid
  • Tracks your progress as we work towards debt freedom

To best illustrate this step, I’m going to use a fictional example of the Jones Family. We will see what their debt budget looks like, and how you can build one yourself using Microsoft Excel or Google Docs Spreadsheet.

For these examples we will be using the MS Excel Spreadsheet I designed for my own use, and used for the last 8 years. As always, if you want a FREE copy of this spreadsheet, email me through the Contact Page on the left side of your screen and I’ll email you one right away.

So let’s look at our spreadsheet from a macro view, then we will examine all the sub-areas individually.

Click to enlarge. This is my debt and bill spreadsheet with embedded instructions for use.


On first glance you can see that it lists all your monthly bills, as well as your monthly debts (in the blue and green areas). This is done on the left side of the spreadsheet. These areas also keep our bill due date, interest rates, minimum payments due, interest rates and finance charges: basically all the important stats about our bills and debts.



On the far right side of the chart you will have a running total for the year, which is nice when you get to December and you can see how much you spend each year on things you choose to spend money on.

Beginning in the white area near the middle, you can see each vertical column is a month, and each cell in that month corresponds to one of your debts or bills across the horizontal rows. After you make a payment towards a bill or debt, it is immediately entered in its cell and you know it’s taken care of.

Starting at Row 17, you can see your running monthly totals. I have put formulas in my chart so that you don’t have to do math; the totals are automatically updated for you as you make more payments.

Near the bottom of the chart, starting at row 26, is your big picture totals for the month. Here we have your total Non-bill spending (which is your discretionary spending: groceries, entertainment, gasoline, and any other unexpected expense that didn’t make the chart). This cell is linked to Sheet 2 on the chart, which is where you enter your receipts and spending records for every transaction you make.



We also have places for you to see your Total Spending (all bills, debt payments, and discretionary spending), your Take Home Pay, and how your spending reconciles with your income (whether you went over or were under, and by how much). There is also a cell for the total amount of debt you paid off for the entire month (if you rent, you will have to adjust this formula so it doesn’t count your rent payment as debt payoff).

Let’s take a quick look at Sheet 2, labeled Monthly Spending. In here we are simply logging each receipt we get, the date, and what it was for. I don’t go crazy here and I don’t advise you do either (unless you want to). This means I’m not breaking down each receipt to Target into subcategories like clothes, food, toiletries, etc.

If you do this, you’ll probably be overwhelmed with data and tracking.

Are You Keeping Up with the Joneses?

Now back to our hypothetical Jones family. What can we learn about them based on the numbers in our example chart? We can see that they have a decent monthly income, but we can also see that they have a decent amount of consumer debt. Between their credit cards, student loans and a personal loan, they owe about $45,000 (not counting their mortgage).

We can also see from their discretionary spending that they did a good job spending less than they earned, which allowed them to put an extra $650 this month towards their consumer debts. Notice that it was applied to their credit card with the smallest balance (more to come on this in the next Rule).

The Joneses also had about $237 left over at the end of the month. What they do with this money, and what you do with your surplus, is up to you. If you don’t have a solid emergency fund, put it there. If you have a good emergency stockpile of money, put it towards the smallest consumer debt as an extra principal payment at the end of the month.

To Recap

As I mentioned earlier, having a debt and bill budget allows us to compile all our bill and debt expenses in one place, gives us a place to keep track of what has been paid, and what needs to be paid, and tracks our progress as we work towards debt freedom.

Gone are the days when we are late on payments simply because an envelope fell into the gap between seats in your car. Ahead are the days when we can execute our debt freedom plans with confidence and the information we need to make debt freedom a reality.


Goal 1: Compile all your bills, debts and expenses and get them entered into your chart.

Goal 2: Don't miss any payments and continue to spend less than you earn.


10 Rules to Eliminate Your Debt and Change Your Life

1. Combine Incomes, Finances and Efforts 

2. Spend Less than You Earn

3. Make a Monthly Debt Budget and Live by It 

4. Pay Off Debts Smallest to Largest, Regardless of Interest Rates

5. Make Big Changes for Big Results 

6. If You Don’t Need It, Sell It 

7. Save Monthly for Large, Anticipated Expenses

8. Set Aside Some Money for Fun

9. Pay Off Debts Before Investing 

10. The Goal of Work is Retirement