I spent $3 on a raspberry chocolate bar the other day. The three of us sat in the parking lot in the rain, breaking off little pieces, giggling, singing along to Gnarls Barkley on the radio, and watching the rain drops bounce on the hood.

Was that $3 an effective use of money? Of course not. A $3 candy bar? It was very good chocolate, but it was $3 that basically disappeared in a few minutes. That $3 could have helped with the grocery bill or any number of other things; instead, we giggled and munched and the money was gone.

The $3 alone isn’t that big of a deal, but repeated over time, it really does add up. Let’s say I bought that same candy bar once a week – that adds up to $156 a year, enough to make a double payment once a year on my student loan and get it paid off years earlier.

The real value of the situation, though, wasn’t in the routine of it – it was a spontaneous moment of enjoyment with my family. It is those little moments, simple things like sitting in a car in the rain and sharing a candy bar and singing to music and laughing, that will be the things I remember in the future about this time, where the three of us were living together in that tiny apartment and he was in his toddler years, just discovering the world.

Was it worth $3? The chocolate bar wasn’t worth it, but the memory of it will be. Even now, I can close my eyes and see the raindrops bouncing on the hood, my bad falsetto singing along on the radio, a bit of chocolate on my son’s lips as he smiles enormously, and my wife just grabbing my hand and squeezing it. Those things were free, but they’re so great that they’re worth any price.

The value was in the uniqueness of the moment. By simply doing that – or something like it – every week, it goes from being a great, fun memory I’ll have of my wife and my son to something ordinary and plain. Trying to recreate that moment is really futile – I just enjoy them as they come along.

So what’s really important here? Those little special moments that cost a few dollars are fine – they are truly the spice of life. The trouble comes in when these special times start becoming routine – not only does the cost become regular, but it ceases to be special and becomes ordinary.

One of the biggest challenges in personal finance is figuring out ways to reduce the regular bills that we all face each month. These continuous regular expenses simply fill up our budget, leaving us less money to invest for the future – and also less money to spend on things that we enjoy.

The best approach for trimming required spending is to simply walk through all of the required expenses and look for ways to lower that number. Here are forty techniques you can use to do just that, divided up into several sensible categories.

Automobile

Automobiles are money pits – they constantly go down in value, devour fuel by the gallon, and often require all manner of repairs and maintenance work. How can we reduce the cost of automobiles in our monthly budget?

Use public transportation If you have an option that enables you to ride to regular destinations (such as work, the store, or a shopping center) instead of using your automobile, you can save quite a bit of money on gas and maintenance by just dropping a few coins on the bus or the rail system and leaving the car at home (or parking it at a station). In fact, during my earlier days, I exclusively used public transportation and it was painful to add an automobile to my monthly finances.

Sell an automobile If an automobile is sitting in your driveway or garage and isn’t used, consider selling it. If nothing else, the insurance expense will go away, and if you can use the money from the sale to pay it off or, better yet, pocket some of the money, even better.

Carpool If you have an opportunity to share a ride to and from work with someone else, that not only significantly reduces wear and tear on your car and gas expenses, it enables you to use any carpooling lanes on the commute, which almost always save time when commuting and allows you to drive at a speed that .

Keep the tires on your automobiles inflated properly Once a month, stop by a local gas station that offers free air and check the air pressure in your car tires, then fill each one to the maximum recommended amount as stated in your manual. This improves gas mileage by one percent for every two PSI of air you are able to add to your tires.

Debt Reduction

Any opportunity you have to reduce your debt will obviously help in your monthly payments, but many people don’t have the cash available to eliminate debt. There are other options for reducing your monthly debt load, however…

Refinance your home and/or automobile Contact some lending institutions and inquire about rates. You might be able to get into a situation that reduces your monthly debt payments without significantly increasing your overall cost in the long term.

Consolidate your student loans Don’t hold out for a hope of better rates to consolidate your loans, especially if your current rates are quite high. Spend the time to find a good loan consolidation option and it will pay off every single month.

Get a small personal loan through your local credit union This is a great option if you’ve borrowed money to make a smaller purchase, such as furniture or a small home improvement project, and you’re finding the interest rates uncomfortable. The perfect place to look for a helping hand here is your local credit union, which will often offer small personal loans at a nice rate if your credit is solid.

Request a credit card rate reduction If you’ve got a decent amount on your credit card, call up your credit card company and request a rate reduction. If they won’t go for it, get a 0% balance transfer onto another card. The key here, though, is to stop buying on credit until your financial situation is healthy.

Sign up for automatic debt repayment plans Many installment plans, particularly those with student loans, offer an interest rate reduction if you sign up for an automatic plan. You should never pass these up – not only do they save money automatically each month, they’re also incredibly convenient. If you have any installment payments (particularly student loan debt), see if such an offer is available to you.

Sell unused items Dig through your closet and look for items that you no longer use that may have value, then use that cash directly to eliminate debts, thus reducing your monthly debt load. I did this myself with a number of items when my debt load became almost unmanageable.

Energy

We all face a continual onslaught of energy costs, especially as we use more and more electronic devices. Luckily, technology has brought us a few effective ways to reduce costs as well.

Install CFLs Compact fluorescent light bulbs are receiving a big push right now and their advantages are great: a longer lifespan and significantly less electrical usage. Stick with the name brands for now, even at a premium – my entire house switched to GE CFLs more than a year ago and I have yet to replace a single one. A tip: when comparing bulbs, use the lumens number to compare bulbs, not the equivalent wattages – the lumens indicate the actual amount of light emitted by the bulb. Remember also that under normal usage (4 hours a day) and normal electrical rates ($0.10 per kilowatt hour), replacing a 75 watt bulb with a 20 watt CFL saves $0.66 per month. Multiply that by all the bulbs in your house to see how much you’ll save every month.

Install a programmable thermostat A programmable thermostat allows you to automatically alter the heating and cooling of your home when you’re not at home, when you’re asleep, and so on, saving significantly on your heating and cooling bills.

Unplug all unused electrical devices Are there any electrical devices around the house that stay plugged in, but that you rarely use? Most electric devices use a small amount of electricity constantly, a phantom charge. To eliminate that usage, unplug the items.

Utilize timers and power strips Along those lines, consider utilizing power strips and power timers to turn electrical devices on and off. A power strip with a switch on it, when turned off, blocks the phantom charge on those devices; a timer can automatically turn off the charge going to a power strip (or anything plugged into it) at a certain time each night. This is a great way to eliminate phantom charge on your home electronic equipment at night.

Install a blanket for your hot water heater and reduce the temperature In many homes, the hot water heater is a major energy drain; the water is kept hotter than most people ever use, plus the heat is constantly lost to the environment, meaning you have to burn more energy than ever to keep the water so hot. Solve both problems by dropping the temperature down to 125-130 degrees Fahrenheit (around 60 degress Celsius) and also installing a blanket on your water heater to keep in the heat – a blanket can pay for itself in about a year.

Air seal your home Air sealing your home can prevent drafts, which can often cause the loss of cool air in the summer and the loss of warm air in the winter, both of which can increase your housing costs. Here’s a great guide to this weekend project from the EERE.

Entertainment

Many people look at entertainment as the first thing to cut when trying to trim costs, but they often forget to look at the regular expenditures that slowly eat away at your financial foundation month in and month out. Here are some things to consider that you may have overlooked before.

Cancel club memberships Look at things like a health club, a country club, and so on. How often do you really use these services? If you’re using a gym membership less than once a week or a country club membership less than once a month, you’re likely throwing away money.

Reduce or eliminate your cable bill For many people, this advice is beyond the pale, but it’s worth looking at. Perhaps you could trim back on your premium channel selection and just go with basic cable, or perhaps you could even eliminate your cable bill entirely – it will also help with electricity costs because you won’t be watching television as much and you’ll suddenly find you have much more free time.

Look for inexpensive entertainment options Do you utilize the local library? Do you attend local community events like municipal band concerts and so on? Are you aware of local volunteer groups and organizations? Your community often offers many options for inexpensive or free entertainment of all kinds – you don’t have to have a big entertainment budget each month.

Strongly reduce or eliminate travel We live very far from our extended families, so we are aware of the costs of travel. We’ve found that by being selective about what we travel to – and also open to inviting people to visiting us – we signifcantly cut down on travel expenses.

Cancel newspaper and magazine subscriptions If you get a magazine or newspaper in the mail but simply don’t read it, cancel that subscription when it comes up for renewal, no matter how much you “like” the magazine. An unread subscription is nothing more than expensive clutter.

Look at and consider reducing/eliminating other regular paid services Look at services like Netflix – are you really getting $19.95 a month out of these services? If not, just drop the service and look for other options, like a local rental store. What about satellite radio? If you use that but find yourself not using it or just sticking with the same things you listen to on regular radio (like NPR or top forty), then cancel the service.

Food

My favorite room in the house is the kitchen, but for many people it just seems more convenient to eat out, even though it’s incredibly expensive and not as much of a time saver as you might think. Consider these options.

Cook (and pack) your own meals at home When you cook at home, make plenty so that you can freeze some of it for future meals and, even better, take some of it as leftovers to work, drastically reducing the cost of the typical workplace lunch. Some people may shy away from leftovers, but there are some secrets to making any leftovers as good as the original.

Reduce or eliminate eating out or getting take-out Take-out and dining out can be a huge timesaver for a busy family, but the expense can be tremendous – and it often doesn’t save much time, either. Instead, look at other options for dining at home: prepare lots of meals at once and freeze them for easy cooking later, focus on simple recipes, and choose recipes that utilize the fresh produce in season in your area.

Buy nonperishable items in bulk Many people never even bother to look at some of the larger packages of nonperishable items – they think it’s just too much. Try looking at the cost per unit of all of the sizes and choose the one that’s the best deal; often, it is the big bulky package, but that just means you won’t be buying it again for a long time. Spread out over months and over a lot of items (think of all of the nonperishables in your home – food is just the beginning), this can add up to a lot of trimmed fat.

Start a garden Vegetable gardening is a splendid hobby that can often turn a profit if done well. Focus on vegetables that are easy to grow and produce abundant fruit, like tomatoes, and learn how to store the excess through such processes as canning. Opening up a jar of tomatoes in the winter that were grown by you in the summer and canned in the fall is a wonderful experience – and it can really help with trimming the food bill.

Buy generic Many products (not just food) are available in a store-brand or generic form for significantly less money – quite often with the name brand, you’re paying for their advertising budget with the higher cost. Look carefully at the ingredients in generic and name-brand products and if they’re the same, go with the generic one on a regular basis, which will consistently trim money from your shopping bill.

Insurance

We all have insurance to protect against the unexpected, but when we overpay for insurance, we leave ourselves vulnerable in a different way by stretching our budget too thin. Look into these options for ways to reduce your insurance premiums.

Downgrade your health insurance Ask at work about the various options available to you that might reduce your insurance costs, and don’t neglect to look into family options if you have children – if you do, all working members of the household should look at family coverage.

Shop for homeowner and auto insurance If you haven’t shopped around for homeowner and auto insurance lately, now’s a good time to get a few quotes, especially if your credit is strong. If you can save a substantial amount and maintain your current coverage, it’s well worth switching to another provider, but give your current one a chance to match.

Switch to term life insurance If you’re paying for whole life insurance or universal life insurance, look strongly at a term package instead. The cost per year will be significantly cheaper and at the end of the term, your life insurance needs will likely be far less than they are right now.

Raise your deductibles If you’re paying a large premium in order to have a small deductible, you might want to consider switching that, particularly if your claims are infrequent. Raising your deductible can often significantly reduce your annual premiums, easing the monthly strain on your bills.

Other

There are many other areas of your budget that can also afford a bit of fat trimmed from them. Let’s look at a few more possibilities for lowering your regular expenses.

Reduce or eliminate your cell phone bill Ask yourself how much you really use your cell phone; if it’s not all that much, look at perhaps getting a prepaid phone with a small number of minutes on it for those emergency situations when you actually use it. If you do use it a lot, look at the features you’re paying for on your bill and see if you can trim any of those.

Move to a less-expensive child care option We pay a significant amount for our child care, but there are other good options available to us. Look at other child care options in your area carefully and see if it might not be worth moving to a less expensive scenario. If you’re lucky enough to live near grandparents, they might be able to assist with part-time child care as an opportunity to bond with their grandchildren.

Reduce or eliminate organized child activities My own children aren’t old enough yet to be in organized activities with costs, but my nieces and nephews certainly are and the bills can really add up. Look for activities that your child is sincerely interested in (if you don’t know, ask them what they really like) and focus on those while cutting back on the rest.

Eliminate services (housecleaning, landscaping, etc.) If you hire out household services to others, consider trimming back or eliminating them. Instead, put aside some time each week to do them yourself – not only will you save money, but you’ll find that many activities can get the whole family involved (like housecleaning).

Reduce (temporarily) your giving at church/synagogue/etc. If your budget is bursting at the seams, consider cutting back on your giving at your religious service. If this spiritually troubles you, talk to the leader of your religious group about the issue – they’ll usually be very supportive of this if you need some time to get your own house in order.

Strongly reduce or eliminate clothes shopping I have a close friend who insists on having a significant monthly clothes budget. I challenged her to trim her spending in half and instead focus more on looking for bargains – and she’s never looked back. If you need to dress well for work, don’t let that slide, but putting in some effort to look for a bargain can often pay huge dividends. Even better – have a moratorium on shopping for new clothes until you really need something new.

Reduce grooming expenses Instead of having your hair cut and styled weekly, cut back to every other week. If you have your nails done twice a month, cut back to monthly, or have manicure parties where you do it at home with your friends instead. If you buy expensive shampoos, look at lower cost options. It doesn’t have to cost a truckload to keep up appearances.

Reduce or eliminate consumable habits (smoking, alcohol, etc.) Any consumable habit, whether it be smoking or excessive drinking, can be a constant drain on a budget without any real benefit. Give the habit a kick in the pants and your wallet will breathe a serious sigh of relief.

Move to a less expensive area Many people leave this option out when looking at trimming their budget, but if you can find work in another area, it may be worth considering. Look around at other areas of the country where you can find employment, see what your salary would be there, and look at the housing costs. Quite often, you’ll find yourself significantly ahead by looking at areas like Minneapolis rather than areas like San Francisco, even at a significantly lower salary.

Using even a few of these options can really open up some breathing room in a budget, enabling you to break free of debt and chase your dreams.

Yesterday morning, I went to a Target just as it opened looking for some baby wipes for my son. As I strolled through the store, I noticed a small, excited crowd in the home electronics section, so I walked over to see what was going on. The store had received a new shipment of Nintendo Wiis and people were clamoring to get their hands on one.

As I’ve mentioned on here a few times, I’ve wanted a Nintendo Wii for a while and seeing lots of people getting one drove the desire to a fever pitch. There were about six left after the people in line got theirs and so I could have easily reached out and gotten one. We were at a family event, so I could easily visualize taking it back, getting it out, and playing Wii Sports with my sisters-in-law and other family members.

What kept me from doing it, you ask? Here’s what I did instead.

I took a walk around the store. Instead of just grabbing one and rushing for the checkouts as my gut told me to do, I decided instead to take a walk around the store, think about the item, and find the other thing I was intending to purchase (namely, the baby wipes). This gave me a “cooling off” period to get my rampant consumerism in check.

I considered the other things I could do with that $250. I could buy my son a very nice toddler bed with that money. It would buy a piece of furniture or two for the new house. That money could also be used to really stock the pantry when we move with all sorts of cooking supplies that would not only feed another hobby of mine but would feed my family as well. It could pay for part of a lawnmower, too. In short, I thought of many better uses for the money than buying a Nintendo Wii.

I seriously evaluated how much I would use the Wii if I did buy it. In truth, not all that much. It would be a complete blast when friends and family were visiting and I could see my wife and I playing bowling and boxing in the evenings, but other than that it would just sit and gather dust. I can think of many other fun things to do with my wife in the evening and also with visiting family and friends than merely playing with a $250 toy.

I decided not to discuss the purchase with my wife until after I left the store. I didn’t pick up my cell phone and call her because I think there’s some chance she would just tell me to get it, especially since The Simple Dollar is doing well. I knew that if I left the store, then discussed it with her, the odds of spending that unnecessary money were much less, but I could still express my desire to own one.

I gave myself a much lighter reward for making the correct but difficult choice. What was that? I ordered a few purely fun books from PaperBackSwap after we returned from the trip. It didn’t cost me anything, but it was fun and it felt like a reward after being “good” and not spending money – this reward didn’t violate the spirit of not buying the Wii, either, because it didn’t cost anything.

Just a year ago, I would have just grabbed the Wii and headed for the exits. I guess this experience is a clear sign of a change in financial direction.

It was last April, a year ago now, that I really suffered the worst of my financial meltdown, and I finally woke up to the realization that I needed to make some drastic changes in the way I spent my money. I cut a ton of fat out of my spending, paid off all of my credit cards, paid off my vehicle, put thousands away in an emergency fund, and started this website.

In March of this year, I actually managed to spend less than 50% of my take-home after-tax income. I used the rest of that money to make a large payment on my student loan debt, do some investing, save for a home down payment, and build up my emergency fund even more. In April, I won’t quite get there because of an income tax payment (which I was able to simply write a check for without blinking), but if you eliminate that tax payment, I could have possibly been under 40% of my take-home spent.

The end result of this is that I’m undergoing a profound change in how I perceive the requirements of my life. This has manifested itself in a ton of ways, some simple and some profound. Here are some examples of what I’m talking about.

More lifestyle choices Last night when my wife and I were taking a serious look at our financial state and we realized that a lot of doors are now open to us that were simply not even worth considering before. It is now realistic for my wife to quit her job and become a stay-at-home mom; we could not have done that before. It’s even somewhat realistic for me to quit my job and become a stay-at-home dad.

Less insecurity about employment Because of that financial freedom, I no longer have to be constantly stressed out about work. I don’t have to go to work and walk on eggshells to make sure I don’t get “downsized” or “outsourced.” I no longer nod my head in agreement and keep my mouth shut during meetings when something doesn’t make sense – I find out what the real story is. Instead of simply following protocols, doing what I’m told, and twiddling my thumbs otherwise, I dig in and fix interesting and worthwhile problems. My work identity is transforming rapidly – and to my benefit. Even more interesting, I recently flat-out told my boss why the change occurred and he was completely dumbfounded.

Less stress about life I’m no longer worried about any bills, nor does the thought of a financial crisis really worry me. I used to have a hard time sleeping at night because of the financial stress, and my temper was also much shorter than it has been as of late. The sole difference is in my personal stress level, and that stress was mostly fueled by a feeling of being trapped and of hopelessness about my financial state. It’s gone now, and I’m much better for it.

Discovering and rediscovering the things that make me happy When I come home at night, I spend maybe an hour doing stuff I have to do, like housework and such, and the rest of the evening is spent doing what I want to do. With the biggest stresses gone from my life (work stress and financial stress), I realize how many interesting things I really want to spend my time on. I’ve rediscovered my love for writing (and you’re reading some of the output of that), been reading like a madman, been spending hours with my son (especially taking him to the park), been teaching myself how to play the piano (using one freely available to me), and basically doing stuff that seems enjoyable to me. What do all of these have in common? They cost very little money and bring me a lot of personal enjoyment.

So, the question to ask yourself is whether or not the stuff you spend your money on is worth sacrificing this type of freedom. Is splurging for a new Lexus versus driving your Caprice for a few more years really worth what you truly give up for it? For me, I will never go back to spending anywhere near all of my income in a given month, at least not until retirement. The freedom from spending money is an incredible freedom.

Many people (myself included) often want items that they can afford, but by buying it they are really hurting their potential savings for the future. I know personally that

Item I Want: A Nintendo Wii
Tactic I’m Using: Realizing I’ll rarely use it

Whenever I think about buying a Wii, I picture playing it with friends and also with relatives during holiday get-togethers. I’ve played with one and really had a lot of fun with the sports games with it, and I can see it being a barrel of laughs with some of my friends and relatives.

In order to avoid buying this item, though, I ask myself how much I would play it in a very honest fashion. The truth is, except for when friends are over, I probably wouldn’t play it much at all. Using that, I start calculating the costs associated with the system, an extra controller, and potentially a few more games (particularly the downloaded ones, which I would enjoy for the retro appeal), and I realize the cost per hour of enjoyment on a pure entertainment project is really quite high.

Item I Want: A Treo 700p
Tactic I’m Using: Unneeded item replacement

This gadget gets my motor running every time I see one. The plethora of features (mostly the PDA-related stuff) really make me want one quite badly, as I can see tons of uses for it, even on a daily basis.

However, I avoid buying this item by using a mixture of my pocket notebook and my current cell phone. The efficiency of using these items makes a Treo into just a replacement for them, and a very expensive one at that. Why would I want to replace a pair of items that do the job quite easily and for little cost with an expensive item that does both? That’s really, really ineffective and doesn’t generate any additional productivity.

Item I Want: A tailor-made suit
Tactic I’m Using: Repeatedly hinting at it as a gift

I’ve wanted a really well-fitting suit for a long time. My body build (very, very broad shoulders makes my body look like an inverted triangle) makes buying suits an adventure and I’d love to own a suit that actually fits well for a lot of occasions.

My current tactic for this is to hint at it as a gift. My parents, in-laws, and wife are currently insinuating that they’re getting together to get me a birthday gift, so I believe (hope) that it is this. I have no qualms about specifically hinting for gifts – they would buy me something anyway, and this way it is know that it will be something I want or like.

Item I Want: A Dance Dance Revolution setup
Tactic I’m Using: Waiting for the right price

This DDR home setup is basically a home aerobics system. I want something highly interactive that can get me in shape, track my progress, give me some clear challenges to meet, and also work on my balance and footwork (because, well, I lack grace).

So how am I not buying it? I set some very low thresholds for what I’m willing to pay for each piece of the setup (the Playstation 2, the mat, the games, and the memory card) and now I’m waiting for opportunities to buy at the low prices I have in mind. When I see a component at that low threshold, I’ll buy that component; otherwise, I’ll save the money.

Item I Want: A KitchenAid Professional 600 Series stand mixer
Tactic I’m Using: I’ll buy it when…

This has been the hardest item to resist buying because of my love for cooking. I have been making do for years with a hand mixer that has been a very sturdy one, but it has made it difficult to mix a lot of things, especially bread doughs and mashed potatoes, and also to mix complex things thoroughly and evenly. A really good KitchenAid will handle that with ease, making it possible for us to make even more foods at home. I’ve also identified some very good prices on the one I’ve been eyeing, a price point I’m comfortable with.

So why haven’t I spent my money yet? I’ve made an agreement with myself that when I reach a specific savings goal this year, I’ll buy this for myself at the end of the year. Thus, not only will I be rewarded with a very healthy start to my investments, I’ll also have something I’ve wanted to own for a long time.

In the last few months, I’ve been interviewed several times as a result of the success of this site. One recent interview, however, really stood out because the interviewer went immediately into questions a lot more interesting than “why do you write about money” and “how popular is your site” (the usual questions, in other words). I thought that the answers might be interesting for all of you. Here’s the meat of that interview, with the earlier “introductory” questions excised out.

What would you consider your greatest achievement in the last few years?

Less than one year ago, I had five figures worth of credit card debt, a large outstanding loan on my primary vehicle, and I barely had enough money to cover the minimum payments on both. I had nothing at all in savings, either.

So what’s the accomplishment? Without increasing my income at all, I currently have zero credit card debt, I own that vehicle free and clear, and I have several thousand dollars in the bank.

Some people might not view that as a great achievement, but it did lead into the creation of The Simple Dollar, which I launched in November 2006 and currently reaches 7,500 visitors a day. It describes what I learned during this process of turning my financial life around, and the success of it is now aiding me to begin saving for some bigger life goals.

What was the key to achieving that success for you? Was there one thing, or were there a number of factors?

The key moment was the birth of my first child, a son, in November 2005. Before he was born, I was reasonably organized in terms of time management, but the management of a lot of other aspects of my life were a complete train wreck.

I remember distinctly one night, when he was about four months old and I realized that my financial situation was a complete nightmare. I was literally wondering whether I could come up with the money to pay for our housing that month. He was very fussy that evening, so I sat in his bedroom with him, held him in my arms, and rocked with him for several hours. He finally fell asleep on my chest and as I sat there in the darkness and felt him breathing against my chest, realizing how utterly helpless he was and how much he depended on me, I broke down completely. I put him in his crib, sat there in his room in the dark, and hit bottom.

I realized I needed to turn things around with my life, and if I didn’t do it now, I would lose everything that had value in my life.

In other words, the key to achieving this success, for me, was finding inspiration, and it was in the form of a baby.

What are the essential habits that you’ve formed to help you achieve your goals?

I could go on about that for hours. Here are the first two things that come to mind:

One, I avoid situations where I would spend money. I used to go to book stores and browse and usually leave with a book or two in hand. I would do similar things in electronic stores and so on. By simply avoiding these temptations as much as possible, I find it much easier to not waste money on such things – or time.

Two, I review my finances weekly, and do a major financial review monthly. This involves several things, such as checking the balance of every account in my name. Each month, I calculate my net worth (sum of all assets minus sum of all debts) and I strive to ensure that it goes up as much as I can possibly make it go up from month to month.

How often do you think about your goals, review them, and take action on them?

I have different regular cycles for the goals, but the key word is regular. For me, evaluating goals and determining further action is something I have to do on a daily/weekly/monthly basis without fail in order to keep moving forward. Whenever I slack off on it, I find myself slipping into bad habits and laziness.

How do you overcome failure? In other words, how do you pick yourself back up if you are struggling, and how do you motivate yourself if your enthusiasm is lagging?

Honestly, I play with my son. It’s really hard to feel too much like a failure when you walk into the house and a toddler who has just learned how to walk yells “Daaa!” and comes running towards you as fast as his legs can carry you. He often makes me feel like I’m the champion of the world by doing little things like building giant towers out of blocks in the living room so that he can knock them over.

Again and again, he reaffirms that I am not a failure in life. I realize parenting isn’t for everyone, but this little child has turned my life around and made me far more productive and positive than I’ve ever been before.

Could you describe your productivity system and any productivity tips you have for people?

My general productivity system is a lot like a simple GTD. I just write anything I have to do on a piece of paper as soon as I think of it and toss it in my “in” box if I’m busy. Then I process my “in” box regularly. Projects are on their own sheet of paper (or collected sheets with paperclips) where the top one is just a list of the tasks for the project. I also have a filing system for long-term storage. Instead of using the figurative “43 folders” of GTD, I just write due dates of things that are upcoming in the upper right and leave them in the inbox until the date comes. That’s it – that’s all I do to keep things going.

In this modern era, we are surrounded by an almost infinite opportunities to spend money – and an almost infinite number of enticements to take up those opportunities. Advertisements trick us into thinking our lives will be better if we just buy this one item. Our neighbors look happy enjoying their latest luxury. Our friends talk about their desires for the latest gadget. Our family hints at a desire for yet another expensive item.

In other words, the compulsions of everyday life convince us to spend money, not save money. Even though we know that we should be spending less than we make, we’re human – we have moments of weakness and we often fall into those moments of weakness and make frivolous purchases. It’s not a matter of deriving joy from not spending money; it’s a matter of staying vigilant in your cause because you want to protect your dreams.

I’ll give you a recent example from my own life. While traveling, I was feeling very lonely: I missed my wife and my son a lot. Still, I had to get ready for a meeting in a few hours, and as I was dressing and looking at myself in the mirror, I just didn’t feel that self-confidence that I usually rely on when I’m in social situations. In other words, I was in a mindset where advertisements are particularly effective.

Wouldn’t you know it, I wound up less than an hour later walking through a shopping mall with a colleague, looking for a place to dine. On the way, I saw a children’s clothing shop where there was an image of a child, almost the same age of my own, wearing an incredibly cute outfit with a sailboat on the front. It took all my willpower not to walk in there. Shortly thereafter, we passed by an upscale chocolatier – and the smell of fresh chocolate made me think of my wife, and again, I had to tell myself not to go in there and buy a box of chocolate to take home to her.

I actually did fall prey to another advertisement. I generally feel more confident when I’m wearing a cologne of some sort – just a dab under my ears. Well, one of the reasons for my lack of confidence is that I could not find my cologne and I left my room without it. I simply felt less confident – and thus when we walked by a shop and I spied a bottle of a cologne I had considered in the past in the window, I wound up purchasing it. I put a bit on in the restroom and although I felt more confident at that moment, I felt guilty later – especially when I discovered that the maid in my hotel room had simply moved my bottle of Acqua di Gio to an odd place and I could have just worn that.

If I can fall prey to such weaknesses, anyone can. Here are ten techniques for keeping up a day-to-day financial vigilance. These techniques won’t always keep you from spending, but they will eliminate a lot of unnecessary purchases from your budget.

1. Keep reminders of your dreams next to your cash and credit cards.
For me, I keep two pictures in my wallet. One is of my son and the other is of my dream home. Whenever I go to make a purchase, I see at least one of these images and it makes me remember that I have very powerful reasons not to spend.

2. Use the ten second rule.
Whenever you are considering a purchase, stop for ten seconds and think about the purchase. Just count to ten and then consider whether or not you should make that purchase. Think about your bigger goals in life and ask yourself if the purchase really fits into that.

3. Keep clean and confident.
The value of personal hygiene is quite high. Keep yourself clean, brush your teeth, bathe regularly, and dress in clean clothes and you’ll feel better about yourself – and less susceptible to the influence of advertising.

4. Don’t take your credit cards or cash with you – or just take enough to buy what you’re going for.
If you have cash in hand or a credit card in your wallet, it’s a lot easier to buy that trinket than if you didn’t have the cash or the credit card with you. If you’re going out to a place where you might potentially spend money that you know you shouldn’t spend, take only the minimal amount of financial resources you need with you.

5. Avoid situations where it’s easy to spend.
If someone suggests going to the mall, suggest going somewhere else instead – invite them over to your home, or go out to a park or a public entertainment like an art museum. Environments centered around spending money are very, very effective at taking money out of your pocket and putting it in someone else’s pocket.

6. Spend more time with people who share similar financial goals.
My best friend (besides my wife, of course) is one of the most financially stable and frugal people I’ve ever met. Doing stuff with him makes it very easy for me to not spend money – a typical afternoon hanging out involves playing board games or watching some random sci-fi television show. If you have a lot of friends, see which ones put you in situations to spend money and which ones are more likely to go along with activities that don’t cost a lot.

7. Explore less financially demanding interests.
I used to have a number of very expensive hobbies. My primary hobbies now are reading (I’m burning through my local library like a madman) and blogging (which eats time but is covering its own expenses and a bit more for the time being). Suddenly, it’s as if I have a ton of money for investing and saving that I simply didn’t have before.

8. Total up your expenditures regularly.
Once a week (or month, whatever works for you), take a look at everything you’ve spent, count everything that wasn’t essential, and total it. You might just gasp at this. Keep that number in mind every time you go to spend money and imagine what that number could be doing if it were invested instead. For me, it’s the difference between a nice house and a very, very nice house.

9. Ask yourself why exactly you want a particular item.
Thinking of buying a flat screen TV? Why? Is there something particularly wrong with your current television? Do you actually need to spend thousands just so your television can be thin? Whenever you evaluate splurges in this light, the compulsion to buy shrinks – and perhaps disappears.

10. Establish a “waiting period” before any nonessential purchase.
If you’re still ready to buy after all of this, wait a period of time before buying. Give yourself twenty four hours before making the purchase. Walk out of the store, go home, and sleep on it. If you still think the purchase is worthwhile the next day, then go forward with the purchase.

It’s scary: according to Money Magazine, 65% of Americans are in a financial situation where they are less than one paycheck away from financial meltdown. In other words, the majority of Americans are currently living paycheck to paycheck and would be approaching a major crisis in less than a month if one of the family members were suddenly unemployed or injured or a major financial crisis struck.

I used to be on this treadmill, and it was scary (to say the least). I went to work each day with a bit of fear in my stomach, a feeling that if I received a pink slip at work my entire life would sink into an unmitigated disaster. I sat down one day and realized that in order to live and to dream, I needed to find a way to get off this treadmill, but I was addicted to spending.

Yet, after just a few months, I found the treadmill slowing down and I felt myself stepping off of it. Now, I honestly feel as though I could walk away from my job without any serious regrets and be able to leisurely find another position if I so chose. It’s a wonderful feeling that has not only made me personally happier, but also made it much easier to focus on the things that are really important in my life. My stress level has fallen substantially and my family seems a lot happier, too.

Here’s a guide to getting off that treadmill and living a free life again – in just six months.

First of all, set a tangible goal. You are off the treadmill when you are spending less than you bring in and you have at least a weekly paycheck worth of money in a savings account. Eventually, it’s good to have half a year’s worth of salary saved up in a nice emergency fund, but for now, let’s set a goal that can be attained by someone on the paycheck treadmill in a reasonable amount of time.

How can you spend less than you bring in? You can start by putting a little bit each week automatically into a “locked box.” It’s pretty easy: just sign up for an online savings account at HSBC Direct (5.05% APY interest rate) or ING Direct (4.5% APY interest rate, awesome interface, great customer service). Set it up to withdraw a small amount from your checking account each week and forget about it for several months. Depending on how much your weekly withdrawals are, you could suddenly have a very nice buffer against emergencies.

Another technique is to use the ten second rule. Every time you make a purchase of any kind, stop for ten seconds and ask yourself if it’s really worth buying. Quite often, you’ll find yourself putting the item back on the shelf. For some people, a “24 hour rule” works better, but the concept is the same: think before you buy.

Just doing these two things is enough to set you in the right direction. If you’re ready to take another step, try out the one month challenge as a way to really take a fresh look at what you’re buying. Spend that month carefully considering each item you buy and recording all expenditures, then look through the results and ask yourself whether this stuff is worth the stress of barely staying on the paycheck-to-paycheck treadmill.

Give it six months and see where you’re at in that lock box. You’ll probably find more than you think in there; even better, you’ll find ways you never thought of to get yourself on the right financial track.