Maybe you don’t have a fund per se, but you had planned on getting rid of your debt this year.

Well, how can you cut back if you don’t know where your money is going?

Let’s say you have no idea how much you owe, or what you have to pay each month to get out of it.

1. Know what your debt number is

How much do you owe?

You don’t know?

Well start opening those credit card bills, and writing down the minimum amount due, the total debt you owe, as well as the interest rate.

Once every letter has been opened, and not chucked into a trash bin by your desk, tally up the totals.

It may come as a shock at first (or maybe not), but the first step to getting out of debt, is knowing what your debt number is.

Let it sink in.

Reflect on it for a day to strengthen your resolve to eliminate it, and then start making a plan to get rid of it.

2. Find out how much you make, NET per month

I am not talking about how much you make in a salary per year. That’s your “gross” salary.

Let’s say you make $40,000 a year.

$40,000 divided by 12 months = $3333.33 GROSS per month

You don’t actually bring home that amount each month.

Your “net” salary is how much you actually bring home to your bank account to use to spend for each month, net taxes and other fees.

Look at your pay stub, and you might see something like : $1300 bi-weekly, which is $2600/month.

That is your NET monthly salary.

3. Create a rough budget from your NET monthly salary

If you bring home $2600 a month, allocate the amount into all of your fixed categories, which are areas that do not change from month to month, like rent, or your car payment.

After that, allocate the rest into your variable categories, which are areas you can change from month to month, like groceries, utilities, gas money, and eating out or shopping.

This is a good way to see what you have left, after you pay the piper (rent, car payment, debt repayment), and it may surprise you.

But we aren’t done yet. A budget is useless if you don’t know what you actually spend each day.

4. Start tracking your daily expenses

Every single time you spend money on something, be it on a credit card, debit card, or using cash, WRITE IT DOWN.

Once you add up all the numbers at the end of the month, you can see whether you stayed within your $2600/month net salary, or if you went over.

5. Start making changes after your analysis

Look at where you went over.

You said you only really spend $100 a month eating out, but your daily expenses show that you spend $300 a month!

You said that you only spend $200 a month shopping for clothes, but it’s actually $450!

Once you know your real numbers, and what you thought the numbers would be, you can start cutting back in areas and being more conscious in your spending.

Still feeling unsure?

Check out my budgeting spreadsheet here.

I created it with all of the above in mind, and even wrote a little How-To that goes along with it.

Even better, all of the proceeds from the sales of this FB Budgeting Sheet for 2010 will go to the Make-a-Wish foundation.

Don’t forget!!

To save some money for Emergencies

You should save at least $1000 in your bank account while you are clearing your debt for emergencies, preferably 3 -6 months.

I saved $1000 when I was getting out of debt, but now I see the need for at least 3 – 6 months in my current case.

It also helps if you have low living expenses, because you are on the hook to save less for basic living expenses.

But it is up to your discretion depending on how steady your income and job is.

Sign up & take advantage of your company retirement matching plan

Ask questions and start learning about your company retirement plan, if you are lucky to have one.

They usually offer a 50% match on your retirement savings or a 100% match.

All you have to do, is save the required amount, and your company will chip in and match the amount you save.

This means that you can get FREE MONEY.

Don’t be discouraged if you falter here and there.

It’s all part of the learning process. We all make mistakes, the thing is to pick yourself up from it.

This post originally appeared as a guest post on The Chic Life.