The first and most important step for getting – and staying – out of debt is to create a workable budget. Whether you use a spreadsheet or other form of tracking your spending, you’ll feel more empowered when it comes to your finances and can finally begin to save money for things you want and need when you know exactly where your money is going.

First, assess your net income – the money you bring home for expenses. Make sure you don’t use your total salary as your net income, but only what you get to spend after taxes and other deductions.

Your final take-home pay is the net income you’ll use when creating a workable budget. Next, track every penny of your spending for a month. This will be able to help you make adjustments in the way you spend money and identify where the problem areas are.

Some people are surprised where their money is going when they take a hard look at it. Set reachable goals – those that you want to accomplish that are both short and long term.

When you set short term goals, have in mind a year or less to get them paid. Long term goals may take years to accomplish. You can change your goals from time to time, but make sure you stick to a general plan of action.

You’ll want to know what your variable and fixed expenses are so you can accurately predict the amounts in your budget. Check out your past records for spending to predict your variable expenses.

The variable and fixed expense reports will give you a good idea of what you’ll be spending during the year ahead. Fixed expenses will likely be more accurate than variable ones such as clothing and unexpected medical expenses.

Take a hard look at the habits you’ve developed in the past and adjust them so that you’re not leaking money that could be used to pay off bills or other needed or wanted goals.

Look for cuts you can make to your spending and try adjusting the numbers in your budget so you can eventually accomplish your goals. Don’t work on a budget and then forget about it.

That’s the surest way to go back to your old spending habits. By keeping an itemized budget, you can easily look back to see how you’ve spent each dollar and adjust as you move on and pay off nagging bills.

Make sure you know your goals and consult your plans periodically as you would a map on a cross-country trip. One mistake many people make when formulating a budget is to cut out all of the fun in their lives.

But rather than cut out all restaurant meals, simply cut down on how many times you eat out as a family. Rather than taking your lunch to work every day, allocate one day a week to go out with friends. You are in control of your finances – make your money work for you.