How one woman learned to live within her means

When 42-year old Claire Kahn got married 15 years ago and opened up a hair salon with her husband, all was good. Business was booming. Cash flowed freely.

With her husband paying all the bills and managing the household finances, Kahn, of West Bloomfield, Mich., says anything she earned was considered 'fun' money. And she spent it -- and then some! -- as soon as it came in. "I went to concerts, bought Prada bags, $400 chairs, couches, makeup, lipstick, whatever I wanted," she says. "I spent thousands of dollars at the flea market every Sunday; it was excessive."

Fast forward five years. That's when circumstances changed. "I found myself divorced, alone with two kids and minimal child support -- about enough for Taco Bell," says Kahn.

Khan, who says she didn't even know how to balance a checkbook, and considered herself financially 'clueless,' knew the carefree lifestyle had to end and that she would have to become more financially accountable.

Here's her strategy, which she still adheres to today:

Keep tabs -- daily
Whether you keep a budget and expense book, as Kahn does, or even a daily journal (where you're making note of your spending habits, keeping track of your short and long-term goals, and implementing a strategy for achieving those goals), the idea is to see your financial behavior point blank. "It never used to matter to me how much something cost; now I get estimates on everything from couches to carpets, and am even learning to bargain," says Kahn.

Join a support group
Even more useful than keeping a journal and charting your progress is meeting with those who press you to stay motivated, and on course. Kahn meets regularly with a therapist who specializes in overspending, and is also a member of Debtors Anonymous.

Identify a trusted adviser
Kahn meets with her accountant once a week. She gives him periodic updates; he gives her unbiased, honest feedback about her performance and progress. "We're working on a plan for my business and a plan for my life," says Kahn.

Create a culture of accountability
Kahn is not only working on this at her salon (which she now owns outright, employing some 20 people), but also at home. Through example, she is teaching her teenage son the basics as it relates to saving and spending." He knows he has to work for his Xbox games or his golf clubs. He looks at things he wants in terms of how long it takes to earn them."
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