Serious about budgeting? Here's how

October 21, 2007|By Carolyn Bigda | Carolyn Bigda,TRIBUNE MEDIA SERVICES

Sometimes the standard prescription for trimming a budget doesn't produce the desired results. So what do you do if you're still broke after fewer lattes and no more Chinese takeout?

It's a question that a lot of young professionals seem to be asking themselves. A recent survey from brokerage house Charles Schwab Corp. found that people born between about 1960 and 1985 are struggling with both paying down debt and saving for deep-pocket goals, such as a first home and retirement.

With banks becoming stricter about how much money they will lend homebuyers, and fewer employers offering pension plans, it is all the more important to be able to tackle both sets of goals.

One obvious solution is to make more money. Unfortunately, that's not always feasible, and sometimes even if you do land a raise, the money still goes.

In reality, it is going to take some creative and disciplined action to achieve all that you want, no matter what your salary is. Here's what you need to do:

Log your spending.

The first thing is to track where your money goes. In order to direct those precious dollars to where you really want them, you need to follow your spending.

One of the best ways to do this is to buy a small notebook that will easily fit in your purse or coat pocket and write down everything you spend for a month, including the change you might pump into a vending machine.

If you use a credit card or debit card, consult your monthly statement and add those items to your notebook. Include any bills, such as your mortgage or rent payment, utilities and cable.

Reduce your fixed costs.

After a month of logging your money's movement, you'll probably notice some obvious places to cut back. Extraneous purchases, such as that daily $3 latte, add up.

But you also should consider ways to reduce your most expensive bills, such as rent, credit-card interest and car payments. If you shaved off $200 from rent by moving to a less expensive apartment or finding roommates, you would pocket $2,400 a year.

Get creative.

Even after you have traded in a new car for a used one or cut your rent bill, other measures might be needed to tackle debt and start building some wealth.

For help on that, go online. Personal finance blogs are veritable gold mines of budget-slashing tips, and every week a number of those ideas are compiled into a blog carnival, somewhat akin to a magazine or newsletter, called the Festival of Frugality (

One blogger, for example, offers tips on how to put together a cheap Halloween costume. Another talks about saving money by not buying bottled water.

There are also suggestions on how to stick to a budget.

Stephanie Appleton, 36, a stay-at-home mom in Ona, W.Va. who blogs at, says she made cutbacks gradually.

"You have to do one thing at a time and adjust to it first," she said. "I wouldn't want to cut my bottled water, steak and ice cream all at once."

Save those reclaimed dollars.

Be sure to save the newfound money. Make it easy on yourself by having the sum you're supposed to accumulate automatically transferred to a savings account. As your balance grows, you'll miss the steak and ice cream less and less.

Carolyn Bigda writes for Tribune Media Services.

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