Now to their debt. This is where you want to pull your credit card statements and loan statements to the front of your preparation pile. We're going to start smallest to largest. And I want to keep this somewhat realistic. So we will say that Sally and Joe have a total of three credit cards. card number one has a balance of 500 on it we'll say with a minimum payment of $25 a month.

Card Number Two has a balance of 900 with a minimum of 25 a month and card three has a balance of 2000 with a minimum of 30 a month. add those up quick. We get a total of $3,400 in credit cards with a total minimum payment of ad dollars. So next up, still working smallest to largest We will say that Joe and Sally have one car payment, two cars, one not so great and the other one new, which they owe $15,000 on. It's a nice car safe and big enough for their children. The minimum payment for this nice newer car is $300 a month.

Now, to keep this simple, I decided to forego the complexities of a mortgage and just say that Joe and Sally are renting. Now that being said, you can still use this example if you do have a mortgage. A mortgage is just like rent. It's usually a set cost each month. Very rarely does it change unless you know that's grow. But for this example, simple.

With that, let's add up Joe and Sally's debt. We take what they owe in credit card debt, plus what they owe on the newer car, leaving them with a debt balance of $18,400. Keep in mind That you will be constantly updating your budget. So interest isn't something you necessarily need to worry about. Lastly, we're going to add up these minimum payments, giving us a total of $380 that needs to go towards debt each month. Now that we got that figured out, let's move on to Step Four.