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I find it rather interesting how so many people emphasize cutting out the small things in life such as a daily grande-skinny-decaf-extra-hot-no-whip-vanilla-latte but at the same time spend thousands each month on their residence and their autos.  Here’s an idea… live in an apartment, drive a clunker and drink 5 lattes a day.

When it comes to budgeting and managing your money, you have to address the larger issues, the larger expenses first.  Our society has encouraged everyone to go beyond their means when it comes to owning a home or owning cars.  Take out a fat mortgage or auto loan and you’ll be great!  While well over half of your income goes into two areas of your life, you stress out about making ends meet.

When it comes to your home, if you have a mortgage payment that is killing your finances, you need to either re-finance (or get a loan modification) or sell your house.  If you’re like most people, an increase in income is not in the near future which means you either change your mortgage situation now or you won’t change your financial situation.

With regards to your car, if you have a car payment, you need to sell your car and get a car that you can pay cash for.  Seriously, why have a car payment?  Even if you have to drive a piece of crap, how great would it be to have X hundred dollars every month not going towards your car?

It is absolutely mandatory to address these two areas before addresing other areas.  If you have these areas taken care of, then go and address your food spending, your entertainment spending, shop around for better insurance and find other ways to save a few bucks here and there.  But, remember saving a few bucks here and there is like swimming against the current when you have a fat mortgage and massive car payments.  Knock those out and then swim with the current.