You've reviewed your credit report, you've subscribed to a monitoring credit service, and you are on your way to better credit.  But, unless your spending habits change, you could end up in the same predicament you were just in.  So, what's the easiest way to get on a personal budget?  Do you need to hire a financial advisor?  Is there software available that can make this process a little easier? 

What's The First Step In Preparing A Personal Budget?

The first step is always the hardest, but you can make it through the process and live on a personal budget.  The first step involves knowing how much you actually spend eating out and entertaining yourself, your family, and friends in a single month.  So how do you do that?  Let's find out.

Grab your bills and sit in front of you computer.  Pull up a spreadsheet program like Microsoft Excel and let's do some figuring.  List all of your monthly after-tax income.  Then, list your monthly fixed expenditures.  Fixed expenses are your mortgage or rent payment, insurance, vehicle payment, any loan payments (do not include credit card payments), and taxes.  Now, list your variable expenses --cable bill, cell phone, groceries, clothing, auto expenses, eating out, and entertainment.  Subtract your fixed expenses from your income.  This is the amount of income you have for variable expenses each month.  Now, let's examine your fixed expenses.

How Can You Decrease Your Fixed Expenses?

You may be able to refinance your mortgage to obtain a lower interest rate, and thus a lower payment.  If your credit will not allow you to refinance your mortgage right now, then you can look at lowering your auto and home insurance.  Most insurance companies will give you a discount for insuring multiple items through the same company.  Do you subscribe to HBO or Showtime?  Cancel these subscriptions.  What about your telephone bill?  Do you have a cell phone and a home line?  Consider eliminating one or the other (most likely it will be your home line --how you ever survived without a cell phone all those years is anyone's guess?!)  Do you subscribe to any magazines or purchase them monthly at the grocery store or bookstore?  Get the idea.  Believe it or not, $3 here and $2 there will add up pretty quickly.  Don't overwhelm yourself.  Luckily, most of your comparison shopping can be done online.

Consider A Method Of Tracking Expenses When Planning Your Personal Budget

Microsoft Money is probably one of the easiest methods to use as it makes it easy to track monthly and yearly expenditures, and it allows you to download your information into your tax software at the end of the year but Mvelopes Personal budget software will work just as well.  It's less expensive and offers a 30-day free trial. Back to the process -- put all of your receipts in a folder and then enter them into your software program once or twice a week. Then you can see how much you really spend on eating out. You might want to sit down, you may be shocked at what you find by tracking your monthly expenses.  You'll probably find that you have one or two areas where you can cut your spending...whether it's on groceries, eating out, or excessive charges from your cell phone company because you've exceeded your monthly plan minutes, you'll find something!

Analyze Your Spending

Track your spending habits for a month, maybe two to see where you can cut some expenses.  Do you spend too much on lunches out --pack a sandwich, take a frozen dinner.  Do you have a weekly "girls/guys night out"?  Take turns grilling out or cooking at each other's home.  If your girlfriends can drink like mine, then you'll be saving a truck load of money right there.  You'll also be saving a fortune on food.  You can buy those packs of 25 burgers or 12 bratwursts from Sam's instead of paying $7 - $10 per person eating out.  Not only will you save money, but you'll be saving your friends a little money as well.  If you can't convince them to stay in, then try to go during "happy hour" or $1 night.  Most restaurants have some sort of deal through the week to get patrons in their establishment. 

Eliminate Unnecessary Spending

Is there an area that you would like to reduce or eliminate, but are unsure how?  Cut coupons (and remember to take them to the store with you).  Cook dinner instead of eating out, or have an appetizer out and eat your main course at home.  Rent movies instead of going to the theater, or eat before you go--two drinks will cost you at least $10.

Reward Yourself!

Reward Yourself!  Shopping or hang out with the guys/girls for a few hours is not the best idea right now.  Be creative.  Watch a movie at home!  Work a logic puzzle!  Take the dogs for a walk or hit some golf balls in the backyard.  Practice your putting.  Go the library --read a good book!

Few Tips to Consider:

• pay off your high-interest debt before you start putting money in a savings account,
• invest in your 401k up to the amount your employer is willing to match you (why turn down free money?), but only up to the amount that they match,
• stay up to date on your education, and
• look for a higher paying job

Conclusion:

You have to know what your spending habits are before you can start to control them.  Once you've gotten a handle on that, you can start saving some money.  Start a plan to pay down any high-interest debt.  

If you are unable to make your monthly obligations, then you might want to consider one of the following options: credit counseling, debt consolidation, debt settlement, or bankruptcy to get you life on track and your spending on a personal budget.