Do your best to estimate them and don't get too sidetracked by trying to be perfect. It can be tough to know exactly how much you’re spending on certain expenses. This is especially true if you have been cutting back on your regular living expenses while trying to stay afloat. This article explains some ways you can use to calculate your expenses for your bankruptcy forms.
Written by Attorney Andrea Wimmer.
Updated October 13, 2022
Do your best to estimate them and don't get too sidetracked by trying to be perfect. It can be tough to know exactly how much you’re spending on certain expenses. This is especially true if you have been cutting back on your regular living expenses while trying to stay afloat.
Tips to help you figure out your expenses for your Schedule J
The first thing to remember is that this form is forward-looking — meaning it's supposed to show what your household budget is once your debt has been eliminated. It's also supposed to be a 12-month average. That means expenses that only come up every so often are included in the monthly budget.
What are your fixed costs?
This will be the easiest to figure out, so it's a good place to start. Your "fixed" costs are expenses that don't fluctuate by more than say $50/mo. This includes your rent/mortgage, utilities, cable costs, cell phone bill, car insurance and car payments and the like. Find a recent statement for each one of these expenses and jot down the monthly amount.
Bills affected by the weather
Some bills don't necessarily fluctuate from one month to the next, but they're drastically different depending on whether it's summer or winter. This most often impacts electricity and gas bills. If you're not already on a plan that has you set up with the same payment for the whole year, you'll have to figure the monthly average.
The best way to figure out your average monthly expense for these items starts with adding up each monthly bill for the last 12 months to figure out the total amount you spent on this expense in the last year. Then take the result and divide it by 12. This will give you a realistic monthly average for this bill.
What are your variable costs?
These are expenses that fluctuate every month because they’re not based on a minimum payment due to a creditor or utility provider. The following are examples of the type of variable costs most families have:
Food (e.g. groceries and eating out)
Housekeeping supplies (e.g. toilet paper, cleaning products)
Personal care expenses (e.g. shampoo, soap, haircuts, etc.)
Childcare costs (e.g. day care costs, school activity fees, etc.)
Clothing (e.g. new clothes, laundry/dry cleaning costs, etc.)
Medical and dental expenses (e.g. copays, out of pocket costs for prescriptions, etc.)
Transportation (e.g. gas, vehicle maintenance, annual title tags, etc.)
Entertainment costs (e.g. gym memberships, subscription services, etc.)
To avoid getting overwhelmed, tackle one category at a time. If you can, download the transaction history for your bank account for the last 6 months and review how much you’ve spent on each category. Think back about whether that amount seemed to cover everything you need.
As you look at each item on your list, also try to think whether you have this expense weekly (like groceries) or only once or twice a year (like back to school clothes for the kids) and go from there. If you’re buying stuff on a weekly basis (like gas and groceries), multiply the weekly amount by 52 and divide the result by 12 to get a monthly average.
Expenses that only come up a few times a year
As mentioned, your monthly expenses should cover all of your annual expenses, even if you only have to actually pay it once a year or once every few months.
One example for this is title tags. If the total amount is usually around $300, simply use that as your starting point and divide it by 12. The result ($25) is added to your monthly transportation expense.
Another example are oil changes. If you know that you should be spending $40 every 3 months on oil changes to keep your car in good working order, you know you’ll have to pay this expense 4 times per year. To calculate what that comes out to on a monthly basis, multiply the cost of one oil change by 4 and divide the result by 12. In this example, the monthly amount to add to your transportation budget would be $14.
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Of course, these numbers aren't accurate down to the penny. It would be impossible to predict everything to that level of accuracy and you're not expected to do the impossible. The court is looking for what your monthly household budget will be like once you're released from your debt burden - on average - over the next 12 months. So, as you go through this, remember to take a deep breath and just do your best to provide a reasonable estimate based on what you know to be true.