Let's just start with the heart of the matter: I needed to learn how to live on less.

However, I'd lived most of my adult life with more than enough money. The last time I'd budgeted (and mostly by necessity and not by planning) was in university. Once I started working, I'd basically made enough money that I could live as a wanted. I was fortunate enough to have a steadily increasing income as well, so as my needs increased, the money was always there.

As I didn't save particularly well, I made sure that I participated in my company saving plan. That way, the money disappeared from my pay before that pay ever hit my bank. It was simple and it worked.

Other than that - and paying my mortgage - I didn't really have any large obligations. I suppose I lived frugally in some ways - always buying a used car instead of a new one and often taking vacations around home rather than traveling - so I never really had to budget.

Eventually, I abandoned the single state and got married. Two incomes made budgeting even less of an issue. We had lots of money! My personal income continued to grow, so I didn't worry.

I was, if truth be told, a bit wasteful with money. We could have saved a lot more for a rainy day, but I was a bit like the grasshopper in that old story - the ant made it through the winter because of the work done during the summer. The grasshopper didn't.

About 3 years after the birth of my son, I had a health crisis. I was so depleted of energy that I couldn't work. One health problem followed another, until a second baby was born and I struggled to simply make it through a day. My (previously) very healthy small consulting business became a millstone around our necks and I had to close it.

My income came to a resounding halt.

Suddenly, I couldn't make ends meet. I had become the stay-at-home parent by default, but I didn't know the first thing about running a home effectively and efficiently. (Most people tend to view full-time parenting with a certain air of disdain, but I've learned a lot of respect for my fellow at-home adults. It might not be a lot of work if you don't care how you do it; if you care about parenting and running your home well - including saving - the adult at home is working at least as hard as any other "employee", they just aren't being paid for it.)

After a large portion of my savings disappeared just trying to feed a family and run a home, I realized I had to learn some budgeting skills - and fast.

One of the first things that I realized had to go was my expensive Starbucks habit. Author David Bach points a finger directly at this and calls it "the Latte Factor". Every one of those expensive espresso-based drinks was setting me back between $3 and $5. Even if you only spend $3 a day on coffee or other snacks, at the end of the week you are looking at $21 gone from your wallet. (Of course, most of us buy coffee more than once a day, so $21 is wishful thinking.) Even if you only buy an inexpensive coffee for $1.50, if you buy 2 a day, the same $21 is still gone.

If $21 doesn't seem like much, just do a little math and you'll be surprised. At $21 a week for 52 weeks, that's almost $1100 a year!

So, I started to scale back on coffee.

Still, the ends in our budget - where income meets expenses - were not meeting. My husband and I began to look a bit more carefully at our food spending. We were going out to eat at least once a week - and more like two or three times. That's not really that much for many families: eating out once or twice a weekend (even if it's just take-out pizza) has become very common in North America. Then we started to add up the cost of our extra food outings.

Turns out, we were racking up as much as $300 a month on just eating out! If you multiply that by 12 months, you come up with $3,600 over the course of a year. We needed that money in our pockets, so we dropped eating out to 1 or 2 a month, for a savings of $2,700 a year.

Note that we didn't stop eating out completely. We simply cut back - which still allowed the occasional "treat" while getting us into better habits at home.

Unfortunately, this wasn't enough yet. Every time something took us off course - the car needed repairs or we needed something for the house - we ended up in trouble again.

Did I mention that we don't have cable? (That one item saves us $50 or more a month, for about $600 per year.) However, if we wanted to save more on our entertainment budget, we needed to have more fun at home. We discovered borrowing DVDs from our local library!

Libraries have all sorts of great items to borrow. Our local library currently has pedometers to borrow so that you can look at the amount of daily exercise you get. The selection of CDs and other audio-visual materials is quite good. For instance, we saw Al Gore's documentary, An Inconvenient Truth, in both a frugal and green way!

We kept adding incremental changes. I started buying in bulk more. We clipped and used coupons when they fit our buying habits. (Don't buy an expensive product you'd never normally look at just because you have a coupon! But if the coupon is for one of your cupboard staples, it's a good deal.) We bought generic when we could. We even started to make our own bread! Still, we kept getting into trouble, and my savings kept paying the price.

We needed to learn one critical thing: expenses will expand to eat up the amount of money that you have, unless you put a complete stop to that.

Oprah's Debt Diet

"It's Called Currency": Budgeting Basics Series

Money Tracker

This series will continue with "Advice From My Grandmother's Handbook: To Save Money, Stop Spending".