A 10-Week Plan to Cut $1,000 a Month from Your Budget: Ready for the Challenge?

If you've made a New Year's resolution to get your finances in shape, you're not alone. A survey from Fidelity Investments finds a record number of consumers -- 54 percent -- resolved to save more or spend less during 2014.

Unfortunately, if you go about it in the usual way, you're likely to fail.

That's because most people don't put any more effort into their resolutions other than dreaming about what they wanted to be when they grew up. And let's face it: You didn't grow up to be an astronaut or a princess, did you?

But you can't afford to just dream when it comes to your money. According to the Economic Policy Institute, between 2002 and 2012 wages were stagnant or declined for 70 percent of wage earners. Your savings account (assuming you've got one) is paying zilch for interest, your house may still be worth less than you paid for it, college tuitions are rising ever higher, your health care premiums went up and, since 2000, the stocks in your retirement investments have returned a whopping 1.6 percent a year. Worse, you might be one of the 10.9 million workers who were out of a job during November, including more than 4 million who've gone without a paycheck for more than six months.

And that collection of Beanie Babies Aunt Ethel left you isn't going to cover any of it.

Your first inclination is to doom yourself by trying to create the perfect budget, and track down every nickel you spent last year with the fervor of a Kardashian searching for a husband. Or you'll go on the financial equivalent of a crash diet, pinching every penny until you eventually snap and find yourself in Vegas binging on a Kobe cheeseburger topped with Beluga caviar and a stripper.

Instead, let's use the process from my new book, "The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese." Every Tuesday for the next 10 weeks, we'll comb through your biggest monthly bills, carve out ways to save right now, and make your resolution a reality.

The book is based on my Funny Money columns in The Detroit News, where I cut $1,000 from my family's monthly spending, trimming $100 from each of our top 10 spending categories. I didn't create a perfectly color-coded spreadsheet. I didn't plow through a mountain of bills and credit card statements. I just cut our spending so we could keep more of our money.

That's $1,000 a month, $12,000 a year. Counting taxes, that was like giving myself a $17,000-a-year-raise, something I haven't seen in more than five years, not to mention that pay cut.

I'll admit that Mrs. Funny Money and I make a good, middle-class living, but it's not like we were driving twin Bentleys. Your goal probably won't -- and shouldn't -- be $1,000. %VIRTUAL-article-sponsoredlinks%I chose that number because it made a good headline. But whether your goal is $500 a month, $200 a month or $50, the idea is the same: Cut your current spending as deep as you want or need to go. Focus on your biggest recurring monthly expenses. Finally, redirect that cash at your financial goals.

A word about goals: "Saving money" sounds like a good one, but it isn't. Money is just a means to an end. A real goal needs a dollar sign and a deadline, but it also needs to be about more than the money. So whether it's paying off the Visa bill or collecting all the "Duck Dynasty" Chia Pets, chose a worthy target, estimate the cost and set a time frame.

Let's say you have $5,000 on a credit card at 18.9 percent interest, and you want it paid off in two years so you can buy a car. That's $208 in principal for 24 months, plus about $79 in current interest. Aim to cut $300 from your spending and it'll be like your credit card payment is free. You won't have to give up anything else, you won't have to get a second job, and you can get your card balance to $0 on time.

Saving like that won't hurt. Most of my cuts were on things I don't miss or don't care about. I don't notice canceling the subscription to a magazine I never read, I don't notice any difference in long-distance service, and my chili tastes just fine with generic pinto beans, thank you.

A word about willpower: It's easy to think you can goad yourself into living on 59 cent generic potpies and getting your entire wardrobe at the flea market. But willpower is a finite resource and, when you eventually run out of it, your grand penny-pinching plans will come crashing down. But cut your auto insurance bill once, and that savings is repeated -- automatically -- month after month after month, whether or not you manage to get up your gumption.

By the end of 10 weeks, you'll have the basics of a good, realistic budget started, too. Share your savings strategies, questions and tips here in the comments so we can all mark our progress together. By the time we're done, you still won't be an astronaut or a princess, but you can be flying high and living like royalty.

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