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Book I: Taking Charge of Your Finances
Education: Tuition, dues/fees, school pictures, yearbooks, school sup-
plies, books
Credit accounts: Payments on major credit cards, department store
cards, lines of credit through your bank or other lender, or on any other
outstanding debt
Gifts: Holidays, birthdays, graduations, weddings, showers
Recreation: Vacations, movies, books, magazines, newspapers, cable
TV, restaurants, sporting events, sports equipment
Savings: Long-term and short-term goals, as well as retirement
Donations: Charities, churches
You need to set aside money each month for those yearly and quarterly pay-
ments that often sneak up on you when you least expect them. If you spend
$1,200 on your yearly property taxes, divide that number by 12 and set aside
$100 per month so that you aren't caught off guard by your property taxes,
insurance payments, or any other periodic bills.
Within each general budget category, note that some items are essential (the
mortgage or rent payment, the electric bill, and groceries), but other items
are extra (new furniture, gifts, and pizza delivery). From your first list of gen-
eral budget items, develop two separate budget lists, one for essentials and
the other for extras. (We can't dictate what's essential and what's extra for
other people, so we don't divide up the lists for you. Some people may have
to eat out regularly because of work-related issues and so dining out is an
essential item in their life rather than an extra. Others may consider chari-
table giving an extra, whereas their friends down the street consider it non-
negotiable because of religious convictions.)
After you divide your expenses into two lists, look through both your essen-
tial and extra lists to find flexible budget items such as clothing, groceries,
and other food-related expenses where you can cut back using the tips and
advice throughout this book. Make a star next to flexible items in each of
your lists to identify them easily.
Extra and flexible budget items are the main places to focus your frugal living
tactics. You're always going to have to pay your water bill, but cable televi-
sion may be an extra utility that can be done away with for awhile if money's
needed in a more-essential budget category. Book II deals with many budget
categories and helps you find lots of ways to cut back on the extras -- and
save a bit on the essentials, as well.
Step 2: Estimate what you spend
You can't control what you don't know. Go through your checkbook and any
other receipts or records you've kept over the past few months so that you
