Putting your budget on a diet

You get on a diet when you wish to shed extra weight.  When it’s necessary to cut the fat out of your budget, you do something similar – you go on a financial diet.

The key to making your money go further is to trim the “fat” out of your budget.  Using free grocery coupons is an easy way to save money each month.  Unless we are willing to significantly change our spending habits, there will be no reduction in the average $7,000 of debt carried by American households.

To begin with, you must choose which expenses are the most important.  There are certain items that are necessities for your budget: food, rent (or mortgage), utilities, and debt payments.  If you can, pay more on the credit card with the greatest interest rate, and if you can pay only the minimum on the credit cards with the lesser interest rates, then do that too.

Now you need to determine where the “fat” is, in your budget.  If paying off what you owe each month is not possible, then you should consider as “fat” anything that is not a necessity.  Low-mileage SUVs, recreational Vehicles, and boats are all unnecessary “fat”. Find expenses to cut any place you are able to.

If your money is being spent on video game consoles and online games, then it’s best to unplug the machines and spend time in the real world. If you typically spend a lot of money at a fancy salon, then go to a less expensive hairdresser until you pay off your expenses.

When dieting, you substitute unhealthy foods like fried chicken for healthier alternatives like grilled chicken. While you are on a money diet you need to seek out other cheaper choices to replace life’s luxuries. Generic grocery store brands are a cheaper alternative to brand names and designer clothing can be found at bargain prices in consignment stores.  And do the majority of your clothes actually need to be dry cleaned?

Take a pass on buying lattes from that fancy coffee place.  Skip the brand names at the grocery store and buy generics instead. Instead of an evening at the movie theater, go to a matinee; they are usually less expensive.  Also ask yourself if you must have cable TV and pay-per-view. Drop by the museum during its free hours.

Don’t forget, that creating a better consumer lifestyle takes work.  Habits stick with you long after the original reason for starting them has gone, and healthy money habits are no exception; even when you are out of debt, your good habits will remain.