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In today's economy people are urged to spend even though they don't have the means or the money to pay. It's all done through credit and loans, the fluctuations in interest rates, and the general inflation of the economy. Yet wage increases still seem to meander far behind. Which has led to the high rate of foreclosures (up 72% from 2006) and bankruptcies (5.6% yearly growth rate).

So how do we stop ourselves from digging that proverbial debt-hole'? By creating a solid budget and sticking with it. To do this we first need to start thinking of our own means of making ends meet and stop mindlessly listening to the news and media, or worrying about what other people are doing or buying. Focus is key. A budget may not be easy at first, but it will ultimately get easier as you make it a habit. [Did you know it takes about 28 days for a consistent action or thought to become an automatic habit?]

The fact is even the wealthy go into debt if they don't have a budget. And often do if the money wasn't earned. But with a realistic, yet solid budget anyone can become debt free, and eventually wealthy. How do you get started on that path?

Create your list of specific goals. Write them down and read them everyday. It may be easier to begin with imagining where you see yourself in 5 years (Albert Einstein once said that your imagination is like a preview of coming attractions for your life). Then work backwards. Where do you see yourself in 1 year? 6 months? 1 month? Then figure out your weekly and daily goals you need to accomplish to reach those yearly goals.

What is your monthly income? Figure your total monthly household income from wages, child support, alimony, etc.

Now figure what you are spending. It may take a week or two, but carry a small notepad with you. Jot down everything you spend and keep receipts. Your mortgage, energy bills, gas, food, groceries, movie rentals, even if it's a pack of gum, write it down. Then add it all up and subtract this amount from your income. What does that leave you with? Or does it put you in that debt-hole?

You need to find and cut the frivolous items you don't need. Junk food, extra shoes, jewelry, that impulse buy; don't need it. Whatever it is, the money output needs to be lower than your monthly income. It's that simple.

The financial experts agree, once you have figured out your income to output ratio, the first bill you pay every month is to yourself. Start a savings account and put a little something in there every payday. Some say start 2 accounts, one for you and one for emergencies, that way you're covered if something happens to your car or a medical problem pops up.

And last, but of course not least, don't cut the fun out of life. By cutting the frivolous and impulse items from your new budget you will be able to save for the bigger items you need. A new car, remodeling the home, a vacation, etc. Always keep your goal list with you and read it everyday, aware of what you are spending and if it will help you reach that goal.

Finally, good luck to you as you gain control of your budget on your new path to financial success and prosperity.

Learn more about this author, B L Brander.
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