It is estimated that in the

western world and particularly

many Americans spend more

than they have coming in. To

finance their deficit lifestyle,

they run up huge balances on

credit cards and rob Peter to

pay Paul.

As you can imagine, it does not take long for

practices such as these to bankrupt families. Under

these conditions it is difficult for families to purchase

groceries and maintain a residence. The slightest

change can send these families spiraling out of

control. Many even end up homeless.

The key to avoiding the above

scenario is learning to live

within your means which

involves effective debt

management and establishing

a realistic budget. Establishing

a budget may seem like an

easy task all you really have to

do is write down what you owe

and subtract it from what you

have coming in, right? Wrong.

The problem with simple budgeting

is that many expenses are hidden

and not accounted for. After you write

up a simple budget, it may seem like

you have plenty of money left over

each month. But you could continue

to fall behind due to these hidden

expenses.

In order to establish a realistic budget, you need to

track your expenses for a 30-day period. Purchase a

small notebook and write down everything you

spend including your morning coffee, lunches and

dinners out. You will be surprised by how quickly

small purchases add up. Once you have a clear idea

of what you spend each month, you can begin to

draft a budget.

Now, write down everything you spend each

month and subtract it from your net income. If you

spend more than 60% of your net income, you

need to make some changes. The following tips

will help you shave monthly expenses down to a

reasonable size:

*Cut out all needless expenses. Brew coffee at

home each morning to cut out daily coffee costs.

Pack your lunch. Join a carpool. Do everything

you can to cut costs.

*Trim your bills by eliminating

things that you don’t need.

Lower your cable and cellphone

bills by opting out of upgraded

packages.

*Negotiate for lower payments on

all of your bills. Contact creditors

to lower interest rates and payments.

Learn more money management tips here

* Consolidate debt for a lower rate

and payment amount. You can do

this by refinancing your home or by

taking out a consolidation loan.

Debt management services may be

able to help as well.

Remember: only 60% should be

going toward your monthly budget.

Where does the other 40% go? It

should go toward savings and

investment opportunities. Plan for

retirement; start a college fund for

your kids. Whatever you do, invest

in your future.

After you establish a budget, you need to

follow it closely. A budget should more than

just a few calculations made on paper, it

should be a way of life. Update your budget

regularly and stick to it. If you have to, set up

different bank accounts for bill money and

money that should be saved and have your

check deposited accordingly.

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