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Question: Chris in Texas is in the middle of Chapter 13 bankruptcy. They are always negative in their accounts and can't figure out what's wrong. He has $140 taken from his account every week and they have an income of about $85,000 a year. They owe $10,000 on her car, and their house payment is $1,300. Dave explains to him how important a zero-based budget is here.
Answer: You have a leak somewhere. I'm looking at $5,000 a month, and we have $450 and $1,300 going out. You have two kids, so that's not it. Bad management is a good word here. I definitely agree that there's bad management. There's such a huge hole here I could shoot a cannon through it, mathematically speaking. I can't figure it out.
Here's where you need to start. You must do a written budget each month. It's called a zero-based budget. Every month gets a brand-new budget. That means figure up what you are going to be paid before the month begins. Determine your take-home pay after the bankruptcy for this month. Put that at the top of the page, and to me it sounds like $5,000.
Then take out food, lights and water, and I put dollar amounts beside them. Then I take out the $450 car payment, which is absurd. Then I take out a $1,300 house payment. Then I try to figure out where the rest of this money is going to go and I give every one of these dollars an assignment.
Now here's the trick: Once you do this, you cannot spend any money unless it's on that paper. You and your wife get to decide what's on that paper. But you're going to make your money behave instead of wondering where it went. That's what a budget is. Your income minus your outgo equals zero.
I don't think your house payment is too high. I think your car payment is too high, but it's not the problem. There's a leak in here somewhere, dude, and it's not a drip. It's a pretty big leak.