It has been my experience in reviewing finances for people that there are two main categories that "eat up" the money:

1) "Nickels & Dimes"; these are the lunches out, $3 cup of coffee, $2 bottle of water, $5 video rental that you did not watch, etc.

2) "Hidden expenses": the biggie here is interest on credit cards, other debt, etc. There is also late fees, paying for services you really don't even use (cable & phone features, insurance, bank account fees, etc.)

The simplest method is to track ALL your expenses, this means tracking things that you may not have paid cash for, such as credit card interest, and so on. I've found some people do not even consider using a credit card as "spending"!

After a while of tracking ALL expenses, then review the largest ones, and look for the "dollars". For instance, most people do not realize how much money they actually save by paying a little extra on their mortgage. Run an "additional principal payment" through a calculator and you'd be amazed at the total saved.

It helps to break up the expenses into categories as well, (housing, credit cards, auto, etc.). There are guidelines out there as to how an average person or family's spending breaks down.

The process is to look at your largest expenses, and try to save as much as possible. For most people it is housing that is the largest. Refinancing may be an option, shop for the best price on insurance, do all the little things to save on utilities. Also review all your bills for trends and "spikes" to see where you can save.

Keep going down the list by dollar size and category; keep the mindset that there is always a cheaper way. A "frugal" mindset is a key item.

Teg, I think this is a great thread, and I'll be back to add more, gotta run..