Step Three: Limit Your "Wants" to 30 Percent. This sounds great on the surface. Can you put 30 percent of your money toward your wants? Hello, beautiful shoes, trip to Bali, salon haircuts, and Italian restaurants. Not so fast. Remember how strict we were with the definition of a "need"? Your "wants" don't include extravagances. They include the basic niceties of life that you enjoy, like that unlimited text messaging plan, your home's cable bill, and cosmetic (not mechanical) repairs to your car.
If you already own your home or you're locked into a lease, you're pretty much stuck with that ũ귔 payment. Consider relocating when your lease expires to make your budget more manageable or take a look at your other "needs" to see if there's a way that you can reduce any of them. Maybe shop for more affordable insurance or transfer the balance on that credit card to one with a lower interest rate so your minimum payment drops a bit. Your goal is to be able to fit all these expenses into 50 percent of your take_home after_tax income.