In the last six months have you used a credit card to make a purchase that you didn’t pay the balance on the next statement date? Have you found it necessary to cash in a retirement fund to meet current debt? Have you used a payday loan service? These are just a few signs that you may be living beyond your paycheck. Experts who have studied recent activity of American spending have found that many are still trying to support lifestyles as if their incomes were the same as ten years ago. Optimism is a wonderful thing but banking on an economic recovery that will bring pots of gold back to our tables is blind faith in broken ideas and broken systems. The responsibility for your financial well being rests with you. The economy is working to bring itself back to balance it always does but overspending and debt building is going to cause it to pass right by stable to another crash. I survived a personal financial crash myself. Credit card debt, multiple car loans, toys, and shopping was no big deal until I hit the wall finding myself with only one income, thousands in unsecured debt, and minimum payments that I could not meet. My goal is to bring about awareness of your current financial position and provide a useful tool that can be looked at like a boot camp that will allow you gain control of spending so that you and your family do not have to experience the same stress and loss that mine did. If you have hit that wall already, or things seem tough, now is the time to act.

Consider your family budget. If it is not in writing, get it all on paper. Nothing elaborate, the process needs to be simple and you should look at it as a tool, not time consuming and frustrating. Finances can be frustrating enough but you are on track to financial health so start with a solid foundation, a written budget that clearly states your bills and expenses for a month. Don’t wait to start until the first of a month, the first comes and goes and other things become a priority. Finish out the rest of the month with a budget and if you are confident, write next month too. Your budget should include the set payments that are made, variable expenses such as gas and groceries should be estimated, and anything else that money is going to be spent on as closely as you can estimate.

Now, take a look at the past few months of spending. If you are like I was, you can look at your bank statements and credit card statements and know exactly where you were and what mood you were in. The reason you are looking back is to spot glaring opportunity to make some changes in your current spending. Spending a few months on a cash only budget is going to create some anxiety as you see each $20.00 bill pass from your hand to the cashiers. It is an amazing psychological response that you will experience, but it gives you complete control over purchase choices but we have become mindlessly numb to swiping a card and we don’t generally have a mental picture of our bank balance shrinking, so handing the cash over is going to change the way you feel about spending immediately.

A cash only lifestyle can begin to feel like a burden after a few months. Although some who adopt the lifestyle stick with it permanently, most will go back to using cards. The idea of a boot camp is to break the card swiping habit and grow your awareness for every dollar spent. I recommend at least three months on a cash only budget. After that time if you feel confident that you can control your spending and not build more debt with credit then start to introduce cards back into your life. They are indeed convenient but be aware that you can be lulled quickly back into mindless spending. Let me remind you that your goal is to begin to work within your income so when you return to using cards, it is imperative that you stick to your budget.

You can create your cash only budget any way that works for you. I used an envelope method. Simple white envelopes, with each one covering just one aspect of my budget, I must admit that I quickly grew tired of the envelopes and purchased a coupon organizer; this worked much better and was more convenient to handle. For guys who use a traditional wallet, separate your cash with paperclips and a small piece of paper earmarking it. Don’t be embarrassed, it’s your money, handle it how you want. On payday, cash your check; leave whatever balance is necessary to cover any auto-payments coming out. It is important that you immediately divide your cash into the different categories. The next step to optimize your budget is to pay the bills expected from this check. Get it out of the way so that you can enjoy life. Waiting until mid-week can set you up to "borrow" from a fund and that can trigger unnecessary spending. It is a dangerous game to play.

When I first started my cash only budget, I really was not sure where my money was going to through the week. I kept notes on my envelopes every time I spent money. It can be difficult to keep up with but it was real eye opening as to where my cash leaks occurred. Once I had a better idea, I switched to keeping receipts in the envelope the money came from. I would review the receipts periodically to review my spending habits.

Taking on the challenge of cash only spending is a great opportunity to gain control of spending and begin to reduce debt. Once you have begun to live within the means of your paychecks and have control of your budget. Your next steps should be to increase your savings and reduce debt. You should never stop saving. Studies show that Americans do very little to plan for their future needs. If you can aim at saving even 5% of your income you will be way ahead of the majority. As debt reduces you savings should increase. The goal of financial stability is a great foundation to build life with.