Bankruptcy and other Consumer Protection Laws were created to protect you

Determining Your Financial Situation

When working to solve your debt issues, one of the most important steps you can take is determining your current household discretionary income. Discretionary income refers to the amount of money left over at the end of each month after all household bills have been paid.

To determine your current discretionary income just review your household budget. If you do not have a budget, then now is the time to develop one. Your budget should include both variable and fixed expenses.

Your variable expenses are those expenses that change on a month to month basis. And, they are often expenses that you have some control over. Common variable expenses include dining out, entertainment, groceries and food, travel, clothing and gifts.

Fixed expenses refer to expenses that do not change from month to month. Common examples of fixed expenses include your rent or mortgage payments, loan or credit card payments, your vehicle loan payment, auto insurance and household utilities.

After you have created a complete list of your household income and expenses, subtract your expenses from your total income. This number is your discretionary income. If the number is positive, you have more money coming in than going out – which is what you want to have happen! If your number is negative, it means that you are spending more money than you are making, which also means you are going deeper into debt every month. This is not what we want to have happen. When this happens month after month, we have a financial crisis on our hands and decisions need to be made, and made quickly.