Budgeting got a bad rap because some people make it more complicated than necessary, but there’s no reason to lie here: being responsible for your money isn’t as much fun as spending it on anything anytime you want. You just have to decide if you are committed to eliminating debt or if you let the “b” word scare you.

When creating your first budget, or the one you live with, the first thing you will want to find out is how much money you have each month after paying all the necessary monthly expenses.

Create a new list! This time, you will want to make a list of your monthly expenses. Include everything from car payments to rent or mortgages to bills and food. Some bills may only arrive every three months and some bills may not be exactly the same every month, but make a list of monthly amounts by calculating how much each bill costs on a monthly basis. If your auto insurance is paid every three months, simply divide the payment amount by 3 to get the amount you would pay monthly. If your electricity bill fluctuates throughout the year, calculate the total amount you pay annually and then average over 12 months to calculate your average monthly bill and increase the payment by a few dollars just to be safe!

Add up the total of all monthly expenses to get the total “must pay each month” figure.

Above, list your total income. For simplicity, write down the income you actually receive and don’t worry about what you buy for insurance or taxes or anything like that. If you are married, combine your after-tax income with that of your spouse to get a total monthly income.

Subtract your total monthly expenses from your total income. This is the amount you have left each month (hopefully a positive number!) After you have paid all your necessities, and it’s called “discretionary income”.

However, discretionary does not mean discretionary! This “leftover” money is what you use for expenses that don’t actually come from your monthly income, such as vacations, clothes, car or home repairs, gifts, and so on. It is also where you get the money for your savings account.

If you find that you run out of money at the end of each month or that you are earning less than you should be paying each month, you need to make some adjustments. You may have to pay your cable bill or get another job for a while until things get better. If you don’t take steps to remedy this situation, you will have no hope of making more money than you spend, and therefore no hope of eliminating the debt monster.

On the other hand, if you have a positive discretionary income number, you can multiply it by 12 to get your annual discretionary income. Using this number, you can divide this money into “odds and ends” you have to pay for, from entertainment to cable TV, car repairs and holiday shopping.