Resolution #4: cut expenses

Okay, January 9th is a bit late to be making resolutions, but we can’t help ourselves. Besides, it’s never to late to make financial resolutions.

The new year (and tax time) is a great time to sit down and look over your budget. It’s easy. Take a piece of paper (or use Excel, if you like your computer), and write down all your income in one column. In another column, write down all the expenses you require to live. For most people, this will include things like utilities, groceries, etc. It the internet a utility? You decide. In a third column, write down all the money you like to spend on non-essential things like cable TV, eating out for lunch, your car payment, etc.

Total up each column. Subtract your expenses from your income, and you should have the balance of your savings account (minus things you spent your savings on, like retirement or fabulous trips to Europe). If you don’t, or if you end up with a negative number, start cutting up your credit cards.

If this is you, it is time to rethink your financial life. You didn’t need those $100 jeans. You don’t need cable TV. You don’t need a nice car. You don’t need a lot of things. Resolve to spend this year with your expenses at a bare minimum. Sell your car and you could go to Europe every third month with the savings. Get a junker or take the bus. Watch network TV, or remember how great books can be. Cut up your credit cards and resolve to pay as much as you can afford to cut into your balances. Don’t buy any new clothes. You have enough.

You’ll be amazed how fast your savings build and your credit is eliminated if you really devote yourself to it.