Step 2. Set up a budget. This can be a difficult exercise for many of us since easy access to credit cards allows us temporarily to hide the truth -- that we spend more than we make. The interesting part of budgeting is that it spotlights how much wasteful and unnecessary spending we engage in that can be curtailed without undue pain. Nondiscretionary items such as mortgage or rent, utilities, food and insurance take up the bulk of most household budgets but it's important to allow yourself some mad money to play with if possible every month. The difference is that instead of giving yourself carte blanche to get anything you want with a credit card, spend a fixed amount on discretionary items.
