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Debt Consolidation

Getting Your Budget Back on Track

It’s smart to reassess all of your spending and saving choices and create a budget that will help you and your family move forward. The good news is: you’re in charge of your money and a few changes here and there can make a big difference in your wallet without having a drastic effect on your lifestyle. Here are some helpful tips to guide your budget management decisions.

Tip #1: Track your spending

A great way to begin a new budget is by keeping track of every penny you spend for a month.

Cash-flow analysis is by far the most important tool in your financial arsenal,” says Andrew Tignanelli, CPA, CFP, and president of Baltimore-based The Financial Consulate Inc. If you’re tech savvy, programs and Web sites like Quicken,,, Microsoft Money, or can help.

Track every purchase from cups of coffee to tanks of gas to haircuts and dinners out. Note all the bills you pay including weekly grocery bills, mortgage payments, and utilities and car payments.

By month’s end, you’ll have a good idea where your money is going. And just by monitoring your spending, you’ll begin to make wiser choices.

“You will be able to cut back 10% – 20% of your discretionary spending simply because you are more aware of where your money is going,” explains Steve Rhode, president of the Myvesta Foundation, an international organization dedicated to helping people create healthy financial lives.

Tip #2: Cut back on discretionary spending

When money is tight, reining in discretionary spending is key.

And that means cutting back on restaurant dining, $3 cups of coffee and all those impulse purchases you make and forget about. When you’re flush with cash, these fun purchases are no big deal. But when you’re looking to minimize your spending and maximize your savings, these non-essential items are the first places to cut back.

So take a close look at your cable bill. Can you get by with fewer channels or a more basic package? And what about getting free videos from the library rather than renting movies or downloading them off the Internet?

Is your mailbox full of magazines that you may get around to reading someday? Do you only read one or two sections of your daily newspaper before you toss it away? Subscriptions can eat up a big chunk of your budget so discontinue those that you’re not really using and source the same or similar content for free online.

Once you rein in your discretionary spending, you’ll have more money available for other areas of your budget and for savings.

Tip #3: Re-evaluate fixed expenses

Next, it’s time to take a hard look at those fixed expenses you pay each month. They include bills for your mortgage, student loans, Internet, cable and car payments.

Providing a home for your family is a top priority so make paying your mortgage a top priority in your budget. But do your best to stay current with all your other fixed expenses as well.

And don’t forget about your insurance premiums. Whether you pay your insurance bills each month, every six months or once a year, you want to make room for each insurance bill as a fixed expense in your budget.

As expensive as it may be, hold on to your health insurance coverage.

“Don’t drop medical insurance. Some folks think they can’t afford it anymore, but we can’t afford not to have it,” Jonni McCoy, author of “Miserly Moms” explains. “I have seen too many disasters happen to folks who have no insurance.”

Tip #4: Re-examine variable expenses

Variable expenses fluctuate month to month. They include bills for long distance, cell phone, utilities, credit card and groceries; and expenses for gas, auto care, home and yard maintenance and personal care, including haircuts and dry-cleaning.

A few simple cost-cutting measures will help you save on variable expenses.

Turning down the thermostat a couple of degrees in winter, and up a couple of degrees in summer will help trim your energy costs. To curb auto expenses, consider car pooling. To cut back on auto expenses in a big way, downsize from two cars to one. Or trade in a newer car with a hefty car payment for a more economical and fuel-efficient model.

Tip #5: Use the right kind of money

One easy, painless way to ensure your success: use the right kind of money.

“There are four basic payment methods in the modern world: credit cards, debit cards, checks and cash,” says Tignanelli. “Through upbringing and personal preference, there is usually one method with which you are much more responsible,” he says.

The secret to success: Find the payment method with which you are most careful and responsible and use it almost exclusively.

“When I put cash in my pocket, it’s going to disappear in an hour or two,” says Tignanelli. “So I rarely use cash,” he says.

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