Sometimes the standard prescription for trimming a budget doesn't produce the desired results. So what do you do if you're still broke after fewer lattes and no more Chinese takeout?
It's a question that a lot of young professionals seem to be asking themselves. A recent survey from brokerage house Charles Schwab Corp. found that people born between about 1960 and 1985 are struggling with both paying down debt and saving for a first home and retirement.
With banks becoming stricter about how much money they will let home buyers borrow, and fewer employers offering pension plans, it is all the more important to be able to tackle both sets of goals.
In reality, it is going to take some creative and disciplined action to achieve all that you want, no matter what your salary is. Here's what you need to do:
Log your spending. The first thing is to track where your money goes. In order to direct those precious dollars to the places you really want them to be, you need to follow your spending. One of the best ways to do this is to buy a small notebook, something that will easily fit in your purse or coat pocket, and write down everything you spend for a month, including the change you might pump into a vending machine.
If you use a credit card or debit card, don't forget to consult your monthly statement and add those items to your notebook. Include any bills, such as your mortgage or rent payment, utilities and cable.
Reduce your fixed costs. After a month of logging your money's movement, you'll probably notice some obvious places to cut back. Extraneous purchases, such as that daily $3 latte, add up. But you also should consider ways to reduce your most expensive bills, such as rent, credit card interest and car payments. If you shave off $200 from rent by moving to a cheaper apartment or finding roommates, you'll pocket $2,400 a year.
Get creative. Even after you have traded in for a used car or cut your rent bill, other measures might be needed to not only tackle any debt but also to start building some wealth. If you need help on that, head online. Personal-finance blogs are veritable gold mines of budget-slashing tips, and every week a number of those ideas are compiled into a blog carnival, somewhat akin to a magazine or newsletter, called the Festival of Frugality (www.festivaloffrugality.com).
One blogger, for example, offers tips on how to put together a cheap Halloween costume. Another talks about saving money by not buying bottled water.
There are also suggestions on how to stick to a budget.
Stephanie Appleton, 36, is a stay-at-home mom in Ona, W. Va., who blogs at http://www.stoptheride.net . Since she first started budgeting seriously for her family about 10 years ago, Appleton has made cutbacks gradually.
''You have to do one thing at a time and adjust to it first,'' she said. ''I wouldn't want to cut my bottled water, steak and ice cream all at once.''
Save those reclaimed dollars. Be sure to save the newfound money. Make it easy on yourself by having the sum you're supposed to accumulate automatically transferred to a savings account. As your balance grows, you'll miss the steak and ice cream less and less.