Okay, you’ve created a budget. If your figures are even vaguely realistic, chances are your hair is standing on end, because you’ve concluded that you can’t live on what you earn, to say nothing of killing off the Debt Monster that comes lumbering out of the Closet of Midnight Worries every time you climb into bed and turn off the light.

Yes, you can!

Here’s where frugality comes into play.

This above all: you need to get real about expenditures. If your budget shows that you’re spending more than you earn, then you are not living within your means. If you are carrying revolving debt—a credit card or department store balance—then you are not living within your means. Living within your means is living on what you earn today, not borrowing against what you will earn next week, next month, or next year.

Look around your home and ask yourself what stuff and services you really need. If the house were burning down, what would you take with you? Whatever you’d choose to leave behind, that’s all stuff you probably can do without.

How many TV sets do you own? If you have more than one, you have too many. Matter of fact, even one may be too many. How many cars do you own? You can’t drive more than one of them at a time. If you’re a couple, can one person use public transportation to get to work, or can one partner drop off and pick up the other one on the way to his or her workplace? Are your cars new models? Can you trade them in on older models to cut down the payments? Fewer cars and reliable older cars mean lower car payments and lower insurance costs.

A sure way to identify the specific things that are costing you too much is to keep close track, for a month or two, of every single expenditure. Keep every receipt and enter it in Quicken or an Excel spreadsheet by category, and at the end of a month, tote up the figures. You’ll quickly see where you’re overspending.

For example, keep track of categories like these and see what happens:

Alcohol

Books

Cable

Car insurance

Car maintenance

CDs

Cell phone(s)

Cigarettes

Clothing

Coffee confections

Eating out (breakfast, lunch, & dinner)

Electronics

Gasoline

Groceries

Once you have an idea where you’re spending, you will see where you can cut back. Because the possibilities are endless, I won’t presume to tell you what areas to hit first or hardest. If you’re wondering where to start, though, here are a few effective tricks:

Quit charging. If you’re carrying a balance on one or more credit cards, even before you start trying to pay off the debt, stop charging! Use checks, cash, or a debit card instead. If you don’t have enough in your bank account to cover a purchase, don’t buy! Defer the purchase until you’ve saved enough to afford it.

Stage at least one no-purchase day a week. Think of it: a whole day without buying anything! You’ll be surprised how painless this can be—and how far it goes toward helping you stay within your budget.

Dine in. Learn to cook (it’s fun!) and get into the habit of eating meals at home instead of going to restaurants or ordering take-out. The food is better and it’s ten times cheaper. This is one of the biggest money-savers you can take advantage of, and it’s also one of the best things you can do for your health.

Brown-bag your lunch at least three times a week. A cheap lunch will cost you at least eight bucks, and likely the food’s none too great. If you bring your own lunch to work or campus three days a week, you’ll save $24 a week. That’s about a hundred bucks a month. Do it five days a week, and you’ve saved yourself $160 a month in restaurant tabs. Not counting tips.

Shop for insurance. Never renew your car or homeowner’s insurance without checking around to see if you can get a better deal. If your car is has reached advanced old age and isn’t worth much more than $1,000, drop the collision coverage and keep only the liability insurance.

Get higher deductibles. And while you’re renewing your insurance, raise the deductibles. This is an effective way to save a substantial amount on the insurance bills.

Turn off the television. And as soon as you’ve done that, cancel the cable service. The amount this saves per month will add up to a nice chunk of dough annually. It has the added benefits of freeing time to do something healthier more fun and of reducing stress.

Find free or inexpensive things to do for fun. Check listings in your local paper, community flyers, and radio stations. Go for walks. Take up hiking, picnicking, and bicycling. Learn to make a kite, and then go fly it. Spend more time with the kids. Teach yourself to draw with ordinary graphite pencils. Sing in a choir. Go to the library and get books, music, and videos for free. Join a sandlot softball team. Grow a garden or cultivate herbs and veggies in balcony pots. Volunteer to help others. If you go to movies, go to late afternoon or Sunday morning showings to get the lowest ticket prices. Substitute amateur or college athletic events for pro spectacles. Throw a pot-luck dinner at your house. Check out SDXB’s list of 60 frugal ways to entertain yourself.

Stay out of malls and stores. Never mall-crawl or window shop to entertain yourself. Stores and shops are not there to entertain you. They’re there to sell you stuff! Never go into a store unless you need to buy a specific item, and then only go when you know exactly what you need and how much it’s going to cost you (this is what Google and Consumer Reports are for).

Learn to shop grocery stores intelligently. Use store cards (protect your privacy by filling them out with a fake name and phone number) to get discount prices. If you have the time and patience for it, collect coupons—some can be downloaded from the Web. But instead of using coupons to buy processed foods, which are usually overpriced and always redolent of chemicals whose names you can’t pronounce, try eating fresh or frozen vegetables and fruits and buying meat, chicken, and fish on sale. Whenever possible, buy store labels instead of national brands. Over-the-counter medications, in particular, are great bargains in off-labels, because federal law requires them to be identical with the maker’s branded product. Read the ingredients: whenever they’re the same, grab the in-house brand.

Use it up, make it do, wear it out. Rinse out ziplock bags and reuse them until they’re shot. Instead of throwing out clothes with minor tears or lost buttons, repair them. Don’t trade your car in on a shiny new model; run it into the ground.

Climb on the wagon and kick the killer weed. Alcohol and tobacco take a huge bite out of your income. While you might manage to justify a drink a day by waving around studies claiming it’s good for your health, if two companions drink one glass of wine each day for thirty days, between them they will consume a bottle of wine every two days, or 15 bottles in a month. Assuming a decent bottle of wine costs $8 or $10, that’s $120 to $150 a month. Even if you can stomach Trader Joe’s two-buck Chuck, in most states Chuck will run you about $4 a bottle, or $80 a month for just tolerable plonk. No way, though, can you convince yourself that a pack of cigarettes is good for you. And a tobacco habit can make tippling for your “health” look like a bargain: check out this site to figure out how much your personal nicotine addiction is costing you.

Make frugality a game. Challenge yourself to find ways to save in as many areas of your life as you can.

Read up. While you’re at the library checking out free books, CDs, and DVDs, pick up a few personal finance books. Three good places to start: Dave Ramsey, Suze Orman, the Tightwad Gazette.

Find moral support on the Web. The electronic woods are full of folks with the same goals: to live within their means, pay off debt, and build wealth. As they share ideas, plans, and successes, they help you to stick with your plan and find new ways to get to where you want to be. To find them, start  here, here, and here.

Does this look like a daunting list? No law says you have to jump in head-first. Start with two or three of these steps toward financial freedom. Then work up to a few more, until you reach your own level of comfort.

Now that you’re simplifying your life to fit the budget you’ve built, the next stage is to dig out from under your debt load. We’ll talk about that in a future post.

This is one of Funny’s Ten Money Principles.

frugal habits