On another spreadsheet, I used our anticipated mortgage application date, which was two years away, and the amount of bad debt I had to figure out how much money per month we needed to pay off the bad debts, maintain my student loans and keep us afloat.
After all my negotiating, I had about $7,000 in bad debts to pay off in two years, which would eat up about $300 per month for two years. As I said before, I was a fledgling freelancer, so funds were tight at roughly $2,800 per month after taxes, so my family needed to make cuts where we could.
We created a working budget that included only the bare necessities to survive, like rent, electricity, gasoline, groceries, water, etc. This budget tossed out all the fun stuff, like beer, movie theater tickets, Netflix, dining out and more. This wasn’t a livable budget, but it gave us a great look at what is left after we pay only the necessities.