Fortunately this step was an easy one for me. Having recently taken over the financial management of our household, I sat down with my husband’s pay stub and all our monthly bills and created a budget. After a few months I continually refined the budget in my handy Excel spreadsheet.  Since we never really had a formal accounting of all of our spending and income I have been tracking practically every cent that comes in and out of our accounts since March. I know I won’t get a true picture for at least a year, but at least for now, I can see an approximate picture. Already I can see the areas where we overspend and the areas where we can just barely make ends meet. It kills me to see how little money is actually coming in. My husband has the advantage of a company match on his 401K contributions so he is getting a good start on his retirement. But at the same time, we can’t seem to get ahead of the monthly bills. I find myself wondering if we would be wiser to contribute less to his 401K and have more money to create an emergency fund or pay off debts. I feel like I’ve cut back in as many categories as I can. I do have what I call my emergency budget, which is things we can do without in an absolute emergency, but that I’m not yet ready to part with. I still want to be able to give gifts to family at Christmas, even if they must be inexpensive ones, and contribute some small amount to the charitable causes that we support. But I also want to begin paying off the debt we have hanging over our heads.  I guess my choices are to find ways to spend less or find ways to earn more.