The following question has been edited into a Q&A format and some details have been changed to keep the listener’s information anonymous. Let us know what you think in the comments below, or if you have a question that needs answering, click the ASK P&B button!

Hey Guys,

Love hearing your show!

So, I’m relatively new to having real jobs. At 25, I’ve had three jobs, all paying less than $45,000 and made some real stupid financial decisions. Currently, I am writing to you after being 5 months unemployed, bank account on the negative (no lie at all!) and recently with $14,000 in debt. I thankfully started a new last week job after being unexpectedly let go earlier this year and still am earning less than $45k.

What should I start doing first? How can I start living a healthier financial life moving forward? To be quite honest, I am so sacred of another budget cut and would like to at least get debt free ASAP but also feel like I should save 10 grand in case the company has budget cuts? Closely watching these elections, I fear for my future and want to v at prepare to never be in this financial situation as well.

Thank you for the help!

Debt free, no cash, need help.

Step 1 is to define your budget. We’ve designed a basic 15-minute Budget Tool at PaychecksAndBalaces.com/Budget15. This will give you a clear picture of how much money you have for discretionary spending (money that can be allocated to your debt or other areas). You can also check out our Financial Planning Month series here for more great advice from our financial planning network. However, you only need a smartphone or pen and paper to create a quick budget estimate:

  1. Define your income or average the last 3 months, if variable; and subtract:
  2. All of your fixed and variable expenses.

Savings are crucial, but $10,000 is a high goal to start. Budgeting sucks, so you want to set yourself up to succeed. For people just starting out like yourself, try initially saving $1,000, then slowly add to this amount each month until you reach your goal ($10k in your case). $1,000 sounds small but the average American (60%) doesn’t even have $500 saved for emergencies, so this is a great starting point to get you moving in the right direction.

Something else to keep in mind is that due to historically low-interest rates, many saving accounts pay less than 2-percent. The average credit card charges over 15% APR. In this scenario, prioritizing savings over debt payments cost you 13% in interest a year, which is why I recommend focusing on paying down your debt after creating your base savings. To estimate various debt payments that might allow you to reach both goals, you can use the budget you’ve created from above and the following free debt calculator options:

Marcus Garrett is one-half of the Paychecks and Balances podcast, an auditor, and author of Debt Free or Die Trying: How I Buried Myself in Over $30,000 in Debt and Dug My Way Out By Age 30. You can find him on Twitter @PayBalances and Facebook: PaychecksAndBalances.

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