Living simply with money? What does money have to do with simple living? Remember that we need to maintain a balance. Simple living is not about living without money. It is about living a balanced life with money being one part of the equation.

In my last article, I posed some questions to encourage reflection upon your priorities and goals in life. In this article, we will discuss how money fits into the overall picture and what we can do to create a better financial balance.

The first step is to create a financial plan, keeping your heartfelt goals in mind. In The Simple Living Guide, Janet Luhrs suggests beginning this by tracking every expenditure (even trivial ones like buying a cup of coffee) for a few months, and then recording these expenditures faithfully. This allows you literally to see where your money goes. Ask yourself, "Is my spending in keeping with my life goals?" If the answer is yes, congratulations! If you answer "no," then read on.

Once you have seen where your money goes, you will probably want to make some changes in your money habits. Your plan of action should include:

1) Get out of debt now! Everything I have ever read about money includes this as a top priority. You will need to look at your expenditures and decide where to decrease spending so that you can pay off your debts. Remember one very important fact: when you buy on credit and make only the minimum payment each month, you could end up paying 40-60% more than the sticker price. If you can't pay cash for that brand new car you want, buy a good used one (for cash) instead.

2) Keep only one credit card. If you do use it during the month, be sure that you can pay it off all at once at the end of the month. Better yet, use it only for emergencies. Luhrs suggests literally putting your credit card on ice -- putting it in a bag with some water, and then putting it in the freezer.

3) Live within your means! For me, this was (and is) the hard part. I tend to be an impulse shopper and have had to curb it. To my surprise, I've found that I can live quite happily without all those things that I used to "have to have." When you live within your means, you will no longer acquire debts and, better yet, you will be able to save money.