Step 2: If you don’t have a balanced budget or you have a lot of debt, you may need to reduce or eliminate expenses in your budget. It’s natural to start with budgetary cuts that don’t hurt, such as changing from a daily double latte to a daily single latte to save yourself a few dollars every week. It’s natural to start this way, but it’s a mistake. Every dollar counts, but don’t start with the small stuff. Instead, examine your budget and concentrate on your top 3-5 expenses, because that’s where your money is going. That’s where you can save large amounts of money. Take a look at your spending percentages and assess your money balance. Start with the big ticket items and the spending categories that exceed the guideline percentages. See if you can reduce your big ticket expenses. For example, can you downsize to a smaller house or apartment? If you can’t do this now, could you plan to do it within a few months? Move to a cheaper location? Can you downsize your car to a more practical, less gas-guzzling vehicle? This is the beginning of creating a sound financial situation: making sure you’re not overspending on the big ticket items. If you are overspending on the big ticket items, even lots of smaller savings, such as the latte example above, will not help you nearly enough to compensate. That is why you start with the big ticket items. Big ticket items could be called “money gushers” because that’s where most of your money is flowing. You need to stop the gushers if you’re going to stop the financial bleeding.