Setting up a budget that will work for you is the first step in creating a debt-elimination plan because you need to know where your money is going each month in order to determine a realistic accelerator. Also, you need a plan of how to use your money each month in order to use it efficiently and to prevent your money from slipping away from your through the nickel & dime effect. Here's how to do it right.

1. Start with the Accelerator Finder Form which is basically a budget work sheet. Follow the forms instructions to minimize expenses to save money & follow instructions below to create your budget.
2. Go through your check book or bills for the last two to three months and add and delete categories from the worksheet to fit your expenditures.
3. Think about your hobbies and your habits and be sure to add categories for these expenses.
4. Go through your pay stubs and calculate your average monthly gross pay.
5. Do the same for any interest income, dividends, bonuses, or other miscellaneous income.
6. For each expense category, try to determine a budget amount that realistically reflects your actual expenses while setting targeted spending levels that will enable you to save money.
7. Once you're comfortable with your expense categories and budgeted amounts, enter expenditures from your checkbook from the last month.
8. Keep track of cash expenditures throughout the month and total and categorize these at the end of each month.
9. Subtotal the income and expense categories.
10. Subtract the total expenses from the total income to arrive at your net income.
11. If the number is negative, your expenses are greater than your income. Your situation can probably be greatly improved by changing your spending habits. For help in this area, check out the Money Saving Resource Center.
12. If you have a positive net income, transfer most of it to a savings or investment account (which should be your debt-elimination plan if you have debt), at the end of each month. Extra cash left in a regular checking account has a way of getting spent.
13. After you've tracked your actual spending for a month or two, analyze your spending to identify where you can comfortably make cuts. Check out our document "Where did all my money go?" for a great tip on tracking your spending!
14. Update your budget and expenses monthly.

Tips:

• Don't try to fit your expenses into somebody else's budget categories. Tailor the categories to fit your own situation.
• Make your categories detailed enough to provide useful information, but not so detailed that you become bogged down in trivial details.
• Think of your budget as a tool to help you get out of debt and save money, not as a financial diet.