Is your budget feeling tight from all that Christmas shopping?

Let’s start off by looking at a sample budget you drew up for someone who earns about $65,000 a year, and brings home around $4,000 each month.

Sample Monthly Budget
Take-home pay: $4,000 (annual $65,000/yr)
Mortgage: $1,350
Cars: $600
Insurance: $210
Credit card debt: $125
Phone: $75
Cell phone: $39
Utilities: $125
Groceries: $250
Entertainment: $250
Gas for cars: $100

Total expense: $3,124
Savings: $876

This family takes home roughly $4,000 per month. But at the end of their major expenses, food, clothing, shelter and utilities they’ve spent nearly 80 percent of their take-home pay.

Hidden expenses:

Annual vacation: $5,000 ($417/month)
Gifts: $1,000 ($83/month)
Medical: $1,000 ($83/month)
School fees: $300 ($25/month)

$4,000 of credit card debt

Extra expense $608
Real savings: $268

Sounds doable, right? But let’s take a look at the hidden expenses, like the annual vacation, gifts – Hey, it’s Christmas, and what about birthdays and anniversaries? There are also the extra medical bills that the insurance policy doesn’t cover, and school fees for their two kids. Plus, this family has $4,000 in credit card debt which is about half of what the average family has, and they need to keep paying down that debt. Even with all this added expense, about $608, they’ve still got about $268 in savings each month. Unless the car breaks down, the roof leaks, they need to buy clothes for themselves or their children, or some other emergency crops up. In other words, they – like so many of us – are living on the edge.

What are some warning signs that you’re in trouble financially?

It’s never a good idea to pay more than 10 percent of your take home pay toward your installment or revolving debt, like school loans, credit card debt or even your car loan. Your mortgage, insurance and taxes should be just a third of your gross monthly pay, or no more than half of your take-home pay. This family is doing pretty well by that standard.

What are some ways to save? Let’s go through some of the categories of expenses.

5 Ways to Save

Gifts. When it comes to gifts, you want to make your gifts, not buy them. You want to give gifts of time and service. Offer to cut someone’s hair or trim their lawn or wash their windows. If you have an elderly relative who is house-bound, offer to do their grocery shopping for them. If you want to buy something, give a magazine subscription, which is inexpensive and comes each month, or give a gift card.

Give Up a Bad Habit. Next, if you can, give up a bad habit or at least cut back. If you smoke a pack of cigarettes a day, and give that up, you’ll save about $1,400 each year. And that savings doesn’t include your dry cleaning bill, or the savings you’ll get from your homeowners or even medical insurance because you’ve quit smoking.

In Your House. You should be able to save some cash by doing a few things around the house now, before winter really sets in. Lower the thermostat 2 degrees. Turn off lights when you’re not in the room. Fix drippy faucets and plug the air leaks.

Trade Down Entertainment. When it comes to entertain, it’s easy to find things to do that are free. Go to museums on the free day or night. Go to matinees instead of evening movies. Instead of that, rent movies or borrow them from the local library. Give up super-premium cable. There are a lot of things you can do that are low-cost or free.

Food. When it comes to food, the holidays are an expensive time. But eliminate one meal eaten out each month, or trade down: trade take-out for a restaurant, and home-cooked food for take-out. Shop only once a week, cut coupons, look for deals and sales and think about getting a Costco or Sam’s club buddy.

For more savings ideas, log onto and type “personal finance resolutions 2004” into the search engine.