NEW BERLIN, Ill. (TheStreet) -- You've heard all the commercials urging you to consolidate debt into "one low payment." The concept, which promises to free up some cash so it is easier to live paycheck to paycheck, makes logical sense. The reason this usually doesn't work is that it doesn't address the real problem: We haven't learned to spend within our income.
What we need is a method to manage and organize our money so we make conscious decisions about how we spend it.
To get started, try the following:
1. Get a small notepad to put in your pocket or purse and write down each time you spend money and what it was spent on. This will help you track what you did with that extra cash you pull out of the ATM.
2. At the end of the month, consolidate your spending information into categories that are meaningful to you.
3. Organize the categories in the following groups:
- Monthly required spending
- Monthly discretionary spending
- Periodic required spending
- Periodic discretionary spending
4. Review your spending and establish funding amounts for your discretionary categories.