The first step becoming financially healthy is to create a budget. You don't need any fancy software to create a budget, in fact, I recommend putting everything in a basic excel spreadsheet. Odds are good that if you are able to read this blog, you have excel. No need to throw money in a new program.
Creating the budget:
1. Gather all income information for a month. Typically paycheck stubs.
2. Gather bills for at least the last month, and back six months if possible.
Once you have all bills, add them to an excel file. For things like food and electricity that vary by month, average them. If you don't have old bills or an accounting of some expenses, estimate them for now and start tracking them.
Don't forget misc. things like birthdays and other gift giving occassions, build in some cushion to cover these things.
After the budget has been worked out, you will be able to see how much is available each month to save for pay off debt. It is always a good idea to build a small nest egg before putting all extra cash toward paying off bills. The standard six months worth of expense money in savings works well for most people.
With the nest egg safely tucked away for a rainy day, start putting the "left over" money toward paying off debt. One of two methods should be used to start. Either put all extra money toward the account with the lowest balance, or put all money on the account with the highest interest rate.
Paying off an account quickly can give someone a sense of accomplishment and the emotional fortitude to proceed. Paying down the account with the highest interest rate will save more in the long run. In the end, the course of action depends on your needs at the moment.
Good luck!
