Oprah's Debt Diet: Step 5, Part 1

Step 1: How Much Debt Do You Really Have?

Chart Your Debt

Get Your Credit Score

Prioritize Payments

Step 2: Track Your Spending and Find Extra Money to Pay Down Debt

Find Your Latte Factor®

Use the Latte Factor® Calculator

Step 3: Learn to Play the Credit Card Game

Pay More than the Minimum Payments

Lower Your Interest Rates

Four Tricks of the Credit Card Companies

Which Credit Cards to Tackle First

Step 4: Stop Spending

Step 5: Create a Monthly Spending Plan

The Monthly Spending Plan Worksheet and Pie Chart

Use the Monthly Spending Plan Calculator

Assign Paychecks to Expenses

Step 6: Take Big Steps to Grow Your Income

Facing Hard Choices

Selling Assets

Earning More Money

Step 7: Prioritize Your Debts and Raise Your Credit Score

Prioritizing Your Debts

Raising Your Credit Score

Step 8: Understand Your Spending Issues…and Save!

Why Do You Shop? Self-Assessment Quiz

How to Protect Yourself and Start Saving

Choose a Topic

Budgets and Tracking Expenses
Buying or Selling a Home

Credit Cards

Financial Planning and Investing
Credit Reports and Scores

Savings and Retirement

Loans

Meet the Experts

David Bach

Glinda Bridgforth

Jean Chatzky

People Who Saved Big Money

Share Your Stories on the Message Boards

Before and After Oprah's Debt Diet

The Bradleys

The Egglestons

The Widlunds

Watch Video Highlights

Buy Oprah's Debt Diet DVD

Step 5: Create a Monthly Spending Plan
Part 1: The Monthly Spending Plan Worksheet

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You have a choice in how you spend your money, so having a spending plan in place is always proactive and empowering. A spending plan, like this pie chart, is the road map you need to get to your destination—a debt-free life.

Print the spending plan pie chart
Requires the free Adobe Acrobat Reader to view.

A new spending plan should be developed for each month, detailing your estimated monthly expenditures. It should be completed 15 days before the month starts. By following this timeline, if you have a shortfall—more money going out than coming in—you will have time to cut expenses or generate additional income.

To free up as much money as possible for debt repayment, create a bare-minimum spending plan using Glinda Bridgforth's spending plan worksheet. This exercise will show you the minimum amount of money you need to get by during a given month.

Here's what to do using Glinda Bridgforth's spending plan worksheet:

Take a look at your calendar and note any special events that may cost money.
Complete your spending plan by making the best estimate of your upcoming bills and other needs for the month. Tweak the payments in all categories to determine the minimum amounts that can be spent without creating a sense of deprivation.
Don't forget to include an amount for your savings cushion so you have a resource available for emergencies.
Calculate your cash flow. What is the amount left over after you subtract the total expenses from the net income you will have for the month?
Include the "Murphy's law factor," which means anything that can go wrong will. Add an extra 10 percent to the spending plan once it's done. That figure is realistically what you're going to spend if something goes wrong (like car problems, plumbing, falling and getting hurt, etc.)
Apply remaining cash to your debts.

Print Glinda Bridgforth's worksheet!
Requires the free Adobe Acrobat Reader to view.

After you fill out your worksheet, go on to Part 2 of the Monthly Spending Plan and use the budget calculator.

Please note: This is general advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio. Harpo is not responsible for any losses, damages or claims that may result from your financial decisions.

Reprinted from Girl, Make Your Money Grow!, by Glinda Bridgforth, by arrangement with Harlem Moon, an imprint of Broadway Books, a division of Random House Inc. Copyright © Broadway Books, 2003.