You should be almost ready to create and follow a budget. If you have completed the first eight Steps, you should have a pretty good idea of how much money you will need to earn each month in order to SURVIVE. If you are not making that much money, you need to decide which things you usually buy that you can do without. For a while, you may have to give up MANY THINGS you want: cable TV, magazine subscriptions, coloring your hair, manicures. Hopefully, you will phase these things back into your life at a later date. If you have a credit card, you may be tempted to use it to make up the difference between what you want and what you can afford. DON'T! The credit card bill will not go away. It will just get bigger.

Click on Your Own Budget to find a form that will help you make a budget.

In order to meet all of your basic monthly needs, your rent or mortgage should not be more than one-third (33%) of your monthly take-home pay. When you add utilities and telephone costs to housing costs, they should not take more than forty percent of your take home pay.

Forty percent of your take-home pay is a little less than half of what you make each month. In order to afford the rest of your monthly expenses, you need to understand and follow this 40% rule. If you discover that you cannot afford to pay as much as you are now paying for housing, you need to find a way to reduce your expenses.

If you own a house, you may be able to rent out rooms to bring in extra money. If you live in an apartment, you may be able to find someone else, who is also in a money crisis, who will move in and share the rent and utilities with you. (Whether you choose a woman or a man as a roommate, insist that they pay one-half of the monthly household bills). Either DO NOT SHARE THE TELEPHONE, or pay only for local service and buy phone cards for long distance calls. You do not want to be responsible for someone else's long-distance charges.

If you think you can afford to pay for rent and utilities, but you are three months behind on those bills, you may be able to get help (once) with back payments. Some churches have benevolence committees that will help. The local Salvation Army branch might be able to help. Ask around and find some group who will pay back rent and utilities for you (once).

If you are in BIG DEBT, you will need to make a plan to start paying it off. If you still have, and are still using one or more credit cards, you must start this process by CUTTING UP THE CARDS, so that you don’t keep adding to the debt. Once you have made a commitment to no longer use the cards, some financial counselors suggest that you list the total amount you owe and the annual percentage rate (APR) for each of your credit cards. Select the card with the highest balance and try to pay a little more than the minimum charge each month. For the rest of the cards, pay the minimum payment ON TIME.

Other advisors suggest that you pay the extra amount on the card with the highest APR, while still others suggest that you try to pay ten dollars more than the minimum payment on each of the cards. Another approach would be to focus on paying off the card that has the lowest balance, then adding the amount of that monthly payment to the payment on the card with the next lowest balance until you pay it off. It probably does not matter which method you choose as long as you make and stick to a plan for debt reduction.

After you have set aside the money housing, utilities, and debt reduction, divide the remainder of your monthly income among the other categories on the budget planner. Many people who do this exercise find that they have a lot more expenses than they do money to pay for them, and that realization scares them. Has that happened to you? Don’t worry. If you have made it through the earlier Steps, you can figure this out.

Try to think of ways to reduce some of your expenses by paying less for them. Eat less fast food. Look for clothes in thrift stores or consignment shops. Take your family for a picnic instead of to a movie. There are many ways to spend less money, and you probably already know a lot of them.

In order for you to be financially secure, you must figure out a way to spend only what you make. If you are new to budgeting, you might want to try the “envelope system.” After you have planned how you will spend your money, write the name of each category on separate envelopes and put the budgeted amount of money inside. Once the money for that category has been spent, you must either stop spending, or you must figure out if you can afford to take money from another category.

It is very unlikely that you will be able to stay within your budget the first month, or even the sixth month. Don’t be discouraged and don’t stop trying. You are trying to break old habits and create new ones, and that will take a while. But, you CAN do this!

Step Ten discusses situations that might interrupt your progress, and what to do about them.