Spend extravagantly on things that make you happy

...but cut costs drastically on everything else.

For the last 6 months, I've made some drastic changes in my spending habits.  I've successfully cut costs on all categories and aspects of my finances.  In future posts, I will periodically detail how I have ruthlessly made these cut backs on useless expenses.

The thing is, by cutting costs mercilessly on things I don't care about, I am actually spending more money on the things that make me happy.  This is what conscious spending is all about.

Here is a great article about conscious spending from one of my favorite bloggers:

I Will Teach You To Be Rich
Ramit Sethi describes "conscious spending - of people who have paid themselves first, then used the money they have left over to do what they want with it."

"Conscious spending means you decide exactly where you're going to spend your money - for going out, for saving, for investing, for rent - and you free yourself from feeling guilty about your spending."

Recently, I bought a pair of the new Apple iPod Nano and watchband for both me and the lady.  Now we have matching geeky tech watches.  But I did not pay for it with money that I didn't save up for.  I used my guilt free spending account to consciously make these purchases.

Read the article above and then think about what you really want to consciously spend money on.  Then think about the expenses that you can do without.