To start fresh after filing bankruptcy you first need to evaluate your personal finances to ensure long-term stability and to determine if you’re going headed into the dark woods of debt again.

Step 1: Determine your household’s monthly net income.

You must first determine the monthly net income for your entire household. Your net income, also called your take-home pay, is the amount of money you earn each month after taxes and other payroll deductions have been taken out

If you get paid twice per month, then your monthly take-home pay is the amount of one paycheck multiplied by two. For example, if your paycheck every two weeks is $1,000 after taxes, then it would look like this: $1,000 x 2 = $2,000.

If you get paid weekly, then your monthly take-home pay is the amount of one paycheck multiplied by 52 (for weeks in the year), then divided by 12 (for months in the year). If your weekly pay was $500 after taxes, then it would look like this: $500 x 52 = $26,000. Then: $26,000 / 12 = $2,166.67.

Don’t forget to do this for each member of the household that has a job. You’ll also want to add income from a second job, regular overtime, public assistance, child support, pension, social security and any other regular income. Once you’ve added up your household’s entire monthly net income, you’re ready to move on to the next step to determine if you’re going into further debt.

Step 2: Calculate your monthly expenses.

This includes anything that you spend money on – Internet, TV, car payments, student loans, medical visits, clothes, lottery tickets, etc.

Click here for a monthly household spending worksheet to print or click here if you’re more of an Excel person.

Step 3: Determine if you’re spending more than you make.

This is the step where it all comes together. To find out if you’re headed toward deeper debt, you will subtract your monthly expenses from your monthly net income. This will tell you about the current state of your finances and help you identify any areas that need to be addressed.

If your income is higher than you expenses, then you have discretionary income, which you can save for a rainy day. Let’s say your take-home pay was $2,000 per month and your monthly expenses were $1,800. If you subtract your expenses from your income, it would like this: $2,000 – $1,800 = $200. You have $200 to put away. Since you have money in the bank when you’re through each month, you are not in immediate danger of heading into deeper debt.

But if your expenses are higher than your income or your expenses are equal to your income, then your family is spending more money than it’s earning, making it necessary to cut costs somewhere. If you don’t, you will end up deeper into debt, owing more money to more people, and possibly trying to prevent a foreclosure.

Questions about debt? Call the Frisco, Fort Worth and Dallas bankruptcy lawyers at Rubin & Associates for a free debt consultation at 1-800-LAWYERS. Prefer email? Click here to email us.