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Here is the big secret, right up front in the beginning!


It sounds so simple but how can so many people get this one wrong? It really is that simple. The rest of this book is intended to show you how to succeed at living within your means. The hardest part is to just get started.

STOP:  Get out a piece of paper and pen right now. No really, do it. This is a psychological trick that really works. Now write this down.

“In order to live within your means, you must make more money than you spend. Or spend less money than you make. I will start right now”

Do this right now, before you read any further.

Write down everything you spend everyday.

John D. Rockefeller did this his whole life. It really works. “Everything” is the key word here. Don’t leave anything out. You must be honest with yourself if this is going to work. Get a small notebook or memo pad and write down all bills, credit card payments, change in the meter, lunch, dry cleaning, mortgage or rent. I mean everything. Go through your checkbook, credit card statements or bank statements and review them for the last 6 months or year to see if there are any expenses that occur less than monthly such as real estate taxes, car insurance or other semi-annual payments. Divide them so that you can get a monthly average. Look for income too, interest, dividends or other income.

Once you know how much you are spending, you can subtract it from your income and see if you make enough money to cover your expenses. You’ll be surprised at all the little things that add up. It seems that most of the saving money books use Starbucks to make their point, but it’s true. If you are spending $100 a month on coffee that you could make at home and take in a thermos, you can cut your expenses. (Most people know how much they make. If you don’t you’ll need to add that up too! )

Now, select basic categories and divide them into two columns:

Fixed and Variable

Fixed items will include anything you cannot easily change.  Include Mortgage or Rent, Phone, Cable, Internet, Car Payments, Insurance payments, regular tax payments etc.

Variable items will include groceries, gas, restaurants, clothing, movies, and trips to Xmart and Xdepot.

Now add a third column for income. Include your paycheck and any other income you may receive. You either need to exclude your income tax and only write down your net paycheck, or use your gross pay and put your taxes into the fixed column. I recommend including your taxes as an expense.

Add up the expense columns and subtract them from the income and see what your totals are.

If you are computer savvy do this on a spreadsheet. Make columns for the date, description, and one for each of the categories, fixed, variable and income. Every day, enter the information you wrote down in your notebook. At the end of the month, add up the columns and subtract the two expense columns from the income.

You can do the above on a sheet of paper. You don’t need a computer. It’s just easier.

Next, if you do find you are spending more that you make, stop! Again, it sounds easy but this is where YOU REALLY HAVE TO CHANGE YOUR THINKING.