smart spending

Secrets to creating a budget

Strategically pay down expensive debt

You'll never get ahead if you don't also implement a plan to pay down your debt. Interest payments made to credit cards not only cost you big, they also deny you the ability to apply that money toward savings or entertainment.

"Not having to pay interest is the same, economically, as earning interest. So not having to pay credit card interest is like earning 18 percent," says Weil.

According to TransUnion, the average credit card debt per borrower was $5,249 in the third quarter of 2014.

Consumers with multiple credit card balances should tackle the card with the highest interest rate first, while continuing to make minimum payments on their other cards. Once the first card is paid off, focus on the next highest rate card.

Tehan contends, however, that some debt-laden consumers get a psychological boost by paying off the smaller balances first. "Paying off your highest rate card first makes sense because it saves you the most money, but if you have several smaller cards, it can be easier psychologically to get those out of the way first," says Tehan.

The secret to paying off debt is to determine how much you can afford to send each month and make those payments consistently.

"It's important to keep sending the maximum amount you can afford to send," says Tehan. "Some people make the mistake of reducing the amount they send when they see their payments going down."

Build a safety net

No matter what your debt situation, you should also begin saving for a rainy day.

Financial planners recommend setting aside three- to six-months' worth of living expenses for an emergency fund in case of job loss, illness or an unexpected bill.

"It's important to set aside savings while you're paying off debt," says Tehan. "It may sound backward, but if you don't have an emergency account and you pay down your credit cards for six months and then an emergency pops up, all the progress you have made is going to be instantly wiped out."

The most painless way to save, of course, is to set aside any financial windfalls you receive, such as bonuses, tax refunds or yearly raises. You could also try saving your change or any $1 bills that find their way into your wallet.

Live within your means

Learning to live within your means is a simple matter of spending less than you make. For most consumers, that means cutting back. It does not mean doing without.

According to Siesta, there are dozens of ways to reduce your monthly expenses without crimping your lifestyle.

And above all else, stop trying to keep up with the Joneses. Your neighbors with the latest clothes and luxury cars may be drowning in debt, and while you may not sport a designer watch, you will be able to sleep at night.

"Being in control of your finances not only saves you money, but it also makes you a more financially secure person and family," says Tehan.

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