I finally caved in last weekend and did the thing that had to be done: I started the official household budget documentation process.

It helped that Saturday was a gray and gloomy day fit for staying inside. My daughter was out of the house, my DVD movie marathon was in session and my time was my own.

For some reason, a yellow legal pad and a pencil remain my favorite tools for getting up close and personal with my financial condition.

You may have your own system. This is mine.

I figure out what my annual costs are likely to be, then I divide by 12 to get a monthly average and compare it to my anticipated income. This gives me a ballpark number of how much discretionary income I have each day. I can then adjust my lifestyle and behavior to match that number.

I don’t necessary like the result I got. But at least I’m dealing with facts and can act appropriately.

With the exception of howling home repair costs or completely unanticipated medical expenses, this really works. This year’s wildcard whopper is an almost 50% increase in my property tax bill due by January. It’s forced me to get dead serious.

My conclusion is that I have to start cutting now to avoid a real problem in future months. I have no debt other than my mortgage and my intention is to keep it that way.

The first things I eliminated this week were my morning coffee-shop breakfasts and my supplementary life insurance policy that affords more than is necessary to carry my daughter safely into adulthood if I die tomorrow.

The total monthly savings is $130 (that’s $1560 a year), and I’ve already gotten used to eating at home in the morning and drinking the acceptable office brew.

You may use some electronic method to do the same thing I do with the yellow legal pad. But whatever your choice, make sure to factor in all your non-discretionary costs - home insurance, auto insurance, mortgage or rent payments, etc.

By totaling your annual costs and dividing them up by 12 months, you’ll know enough to spare yourself the pain of forgetting about an intermittent bill that can’t be covered by your current paycheck. It’s also a great time to look at what you really paid for those unexpected little things and come up with a reasonable expectation of how much these will cost next year.

I’ve already gotten to the place where it’s become a game - both figuring out how to spend even less money each day and coming up with ways to find more. I intend to share the results with my daughter this weekend.

Here’s a good site about Recession-Proofing Your Finances.

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Your kids can learn about money while having fun in MinyanLand.com.