With home equity evaporating like dry ice on a hot day, many Americans can no longer rely on their homes as a source for quick cash. Likewise, credit card issuers are lowering credit limits for many consumers, imposing constraints on spending.

Americans are realizing that the spending party is over and it's time to build wealth the old-fashioned way -- by saving money.

Some obstacles stand in the way. For instance, real median household income grew by a sloth-like 1.3 percent between 2006 and 2007, to $50,223, according to the U.S. Census Bureau. It's not likely to accelerate much in 2008.

For the average budget-challenged family, the escalating cost of living can be discouraging. But saving money involves a clever combination of cutting expenses, and allocating any savings into a bank or investment account before the money disappears.

The goal is doable with stalwart financial discipline.

1. The budget workout: Know where money goes

If you're serious about reining in spending, you'll need to implement a budget. Only 39 percent of Americans say they use a budget to track household spending, according to a survey by the National Foundation for Credit Counseling.

Most consumers find it tough to save money because few families actually know the exact amount of money that's being allocated to a particular expense, says Gary Foreman, publisher of Stretcher.com.

"The main purpose of a budget isn't to tell you whether you can spend money or not. It's to tell you where you're spending it so you can take corrective action," he says.

Nipping unnecessary spending is tough without a budget worksheet. In fact, you're likely to derail your savings plan without one.

Budget worksheets can be especially useful for tracking ATM cash withdrawals -- one of the easiest items to overlook because of the frequency of these transactions.

"One has to detail every time money from an ATM is withdrawn and where that money is being spent," says financial adviser Steve Pomeranz, CFP, host of National Public Radio's "On the Money!"

"Some may not be so inclined to want to do it, but it's part of the effort to get your affairs in order," he says.

2. Set up multiple investment baskets for different goals

Once you've gotten to the point where you've contained wasteful spending, it's time to focus on savings strategies.

One approach: Set up investment baskets for short-term, intermediate and long-term goals. For the first two baskets, divert a portion of your paycheck straight into a bank and brokerage account before you can touch the money. For the long-term basket, contribute to your company's retirement plan or your own IRA.

Your short-term basket should serve as a six-month cash cushion that you can draw upon in the event of an emergency or unexpected job loss.

"It can be a savings account or money market account, and the yield is the least concern with that short-term money," says financial adviser Steve Pomeranz, CFP, host of National Public Radio's "On the Money!"

"It's about protection of capital and liquidity."