A friend at work and I have been talking about financial situations alot lately, and he sent me what looks to be a pretty darn sound plan for saving money. I figured I'd share it with everyone since we could all use a little monetary security now and in the future.

Ok, let's start with the basics. You need to create a budget. A budget
is you telling your money what to do, instead of wondering where it went.

Example - Food. You can see about how much you spent at the grocery
store AS AN AVERAGE MONTH. Round up the amount to the nearest whole dollar and divide by the number of weeks in the month.
a) you spent $75, then spent $85, then spent $33, and finally spent
$46. For last month you spent $239. Round up and say $250. Since there were 4 weeks last month, your average cost of groceries per week was $62.50 per week. For next month, you will need about $312.50 (allowing a maximum of $62.50 per week.)

Go on the same day each week, take a list of things you need and price
compare every item. $/unit. $1.07 for 6 oz = 18 cents per ounce. Getting the cheaper per unit price means you won't be buying the item as many times this month, but at least saving money each time you buy the item. Walk in to the store with ONLY THE AMOUNT FOR THE AVERAGE WEEK - in this case, $62.50. Tax is 9%. Calculate the total before you get to the checkout lane. If it is even 25 cents more, put something back. If you use a credit card or write a check, then you are not following the budget and can easily grab an impulse item.

On the budget make a whole list of things you purchase on an average
month. Car, rent, power, water, phone, cell, internet, etc.... Do not spend any more than allocated for each item. If you don't bring
home enough to cover all average expenses, you either need to modify
some of your services or eliminate services. Ex - if you use your cell phone more than your house phone (if at all) consider closing the house phone account. You'll save $60/month. If you don't watch all the channels on your cable, see how much you will save by eliminating some of those channels. HBO is usually $12/month. Many times they play old movies you don't want to watch. Netflix.com is around $15/month for 3 DVD's at a time. You send one back, they send you another. Keep each one as long as you want, pay the same monthly bill.
Notice how movies at the theatre are usually on DVD before the season is over? Example Steve Martin in the Pink Panther came at the theater in March. It comes on DVD June 12. 3 months. It cost around $20 to see a movie. ONE MOVIE!

If you live on a budget you should start seeing more money left over
each month. ATTACK YOUR DEBT. List your bills from smallest payoff to largest. Forget monthly payments, forget interest rate.
Make the minimum payment to all of your debt EXCEPT FOR THE SMALLEST DEBT. Here, you want to make the minimum plus any extra money you can send. When the smallest debt is paid off, send what used to be that payment to the next smallest debt, plus the minimum payment you were already sending to this one.. You are sending out the same amount, only now another debt is quickly dissolving. Very soon, you see yourself without debt. Then comes the fun part. Investing.

Let's say you are 30 and want to retire at age 60. A ROTH IRA grows tax free, but you can only invest $4,000 per year = $333.33 per month =
$76.92 per week. http://moneycentral.msn.com/investor...avapp/main.asp is my
favorite site. It calculates money for you. The Stock Market averages a 10 year return of 12%, assuming you own 1 share of every company in the world. For this reason, you should invest your Roth IRA in a mutual fund that earns MINIMUM 12% in a 10 year average.
http://screen.morningstar.com/FundSe...oolcenterFdSel
will help you. In exactly 30 years, you would have $1.1 Million Dollars TAX FREE. If you withdrew only 5% once a year, you would have a $55,000 check TAX FREE. If you are still working, then this check is BONUS MONEY. If you are married, and your husband did the same thing (Roth IRA) then he too would have a $55,000 check, and if he is still working, then you have a hell of a lot of money in your account!

Cars - the average car payment in North America is $450/month. Over the next 30 years, you pay it off, and then trade it in on a newer model but your payments stay the same. You will have paid out $162,000. Instead of a car payment, if you invested it in a Mutual Fund account (taxed at 19%) for the next 30 years, you would have $900,000. Almost a million bucks for the car payment alone.

Age 60 - you recieve 5% of the car payment investment $45,000
you recieve 5% from your Roth IRA $55,000
you recieve 5% from your husbands Roth IRA $55,000
what the hell, your husband also had a car payment $45,000

You would recieve $200,000 every year, plus your paycheck if you or both of you are still working.

Oh, by the way. You are living on 5%, that means that 7% is being
reinvested to give us a total of 12%

7% = $63,000 on $900,000
I already have a basic weekly budget, but this stuff ties it up even more and helps to curb any extraneous spending. Charley can attest that I'm notorious for talking myself out of buying something, so sticking to this sort of a budget would be easy for me.

The debt eliminating strategy works great for me, since I don't have too much - a student loan and my car - and so I'm hoping to knock those out relatively quickly.

On the side of investing, I've got my emergency fund set up and ready should anything happen, so now I'm just waiting until I have one thousand to put into a Roth IRA.

I don't know if this would help anyone else, but I thought I'd post it just in case