Our experts tell Liz — and anyone else with a consumption compulsion — how to rein in spending.

Liz spends $24 a day — that's about $6,000 a year — on a car service to take her to and from work. That may sound exorbitant to most people, but the car service is important to Liz (she finds it relaxing and hates the subway) so she can afford to keep doing it, as long as she's willing to cut back elsewhere. For Liz, it's all about prioritizing. She works very hard and likes to pamper herself, and she can afford to — a little bit. In general, though, she has to cut back. Right now, she's living way beyond her means.

Liz is keeping the financial nightmares at bay, thanks to the Consumer Credit Counseling Service. But her situation is tenuous — one accident, one illness could send her spiraling back into debt. Then there's the matter of her future. How does she protect herself and move beyond this paycheck-to-paycheck lifestyle?

We spoke to two personal-finance experts, Glenn Pape of Ernst & Young in Chicago and Gerri Detweiler of MyVesta.org, formerly Debt Counselors of America, in Rockville, Maryland, about Liz's situation.

1. PRIORITIZE. Liz spends a lot of her money on things she doesn't value very highly. She often lays out $400 in a month for gifts to friends, almost 8% of her monthly income, and she's been known to spend the same amount on magazines and books. But when pressed she says those things aren't that important to her.

GLENN RECOMMENDS: Liz needs to devise a budget and stick to it. If she exceeds the budget limit for an item in one month, she has to cut back the next. For example, Glenn says, "if her clothing budget is $100 per month and she buys a $200 coat in the first week, she should not spend any more money on clothes for the next two months."

GERRI RECOMMENDS: Liz needs to think about her goals. "Besides spending money on books and other goodies, what does she really want? A car? A vacation? Enough money in the bank so she can change jobs without worry?" She should figure out what she'll need money for down the road and spend less today with that in mind.

KOBLINER RECOMMENDS: Liz needs to make her spending consistent with her priorities. We asked her to make a list:

Liz's Priorities

1.	Bath stuff — oils, lotions, etc.
2.	Car service to and from work
3.	CD's
4.	Eating out
5.	Deliveries of groceries, take out, etc.
6.	Photography (a hobby)
7.	Subscriptions to magazines
8.	Movies
9.	DVDs, Laserdiscs
10.	Cable
11.	Gifts for friends
12.	Clothing

To see how Liz might bring her adjustable expenses into line with these priorities, take a look at the spending guidelines we put together for her. Her top priorities — taking a car service to work every day and those expensive bath oils — we left untouched. In order to make it as easy as possible for her to save, we also suggested that her IRA contributions and her emergency fund come straight out of her weekly paycheck and gave her a flat $100/month spending limit on a number of the items she spends the most on, including clothing, books, and CDs.

2. BE VIGILANT ABOUT DEBT. Credit counseling has helped Liz devise a plan for paying off her credit-card debt. At her current pace, she will retire those high-rate debts in seven months. That will be quite an accomplishment, but Liz can't rest on those laurels. She needs to keep up her guard against credit-card debt, because it could prevent her from reaching her goals. 

GLENN RECOMMENDS: Liz should use only one credit card. By paying that off every month, she wouldn't fall back into the debt trap. Setting spending priorities would contribute to success in this regard, too. She also needs to pay off her outstanding $1,500 medical bill. 

KOBLINER RECOMMENDS: By relying on just her American Express card, Liz should be able to continue reducing her debt. That is, provided she pays off the AmEx balance every month. She'd avoid finance charges that way, and if her budget cooperates, she might be able to increase the payments through the credit-counseling service. That would help her eliminate her existing debt even sooner. Then she'd have more money to devote to her other priorities.

3. BUILD A CUSHION. Even with a balanced budget and no debt, Liz could be teetering on the brink of financial disaster. That's because she doesn't have a backup in case things go wrong. An emergency fund in a money-market account or fund would provide some security. 

GERRI SUGGESTS: An emergency fund could keep Liz from racking up new debts, and it should give her a cushion if she needs it. If she decides to change jobs, for example, she might need some money to fall back on. 

GLENN RECOMMENDS: Liz should start building an emergency fund that could carry her for at least three months. She makes $6,000 a month, so her cash reserve should be $18,000. To save that much, she could start with her $8,000 bonus, stash away $500 per month for a year, then take $4,000 out of next year's bonus. 

KOBLINER RECOMMENDS: Actually, we think it is Liz's spending that matters most. If she can stay within our budget, she will be fine with a cash cushion containing three months' worth of expenses. Looking at her budget, I'd say she needs to save $12,000 or so. She could put away her $8,000 bonus and save $100 per month until she retires her credit-card debt. Then she could add the rest from next year's bonus, or she could increase her monthly contribution to the emergency fund to $250 and have it built 20 months from now. This money should go into a money-market fund; for the best deals on those, she should check out iMoneyNet. In most cases, Liz can have cash pulled from her checking account directly into her money-market fund.

4. ACCOUNT FOR THE UNEXPECTED. An emergency cash fund is just one part of the safety net Liz needs. What if her apartment is robbed or damaged? She would have to replace all of her belongings by herself. That's why she needs insurance. 

GLENN RECOMMENDS: Liz should investigate renters insurance for her apartment's contents and disability insurance to guard against absences from work. She should ask her employer's human-resources department whether the company offers short-term or long-term disability insurance as a benefit. 

KOBLINER RECOMMENDS: Renters insurance will protect Liz's property in the event of theft or damage. She should definitely get that. She can choose from a variety of providers on Insweb.com. Companies that sell insurance directly to consumers, such as Amica and Geico, generally have the best deals.

5. INVEST FOR THE FUTURE. After she gets her emergency plan in place, Liz can start thinking for the long haul. Even though she's about 35 years away from retirement age, it isn't too soon to start thinking about that. Her contributions to her 401(k) plan and her pension benefits are good starts, but her company doesn't match what she puts into her 401(k). So she might consider a Roth IRA, too. 

GLENN RECOMMENDS: Liz should contribute as much as she can to her 401(k) plan. Within that, she could devote a bit more money to fixed-income investments, which should reduce the swings of the all-stock-fund portfolio she has now. One possible breakdown looks like this: 38% large-capitalization U.S. stock funds, 14% small-capitalization U.S. stock funds, 20% international stock funds, and 28% fixed-income funds. With her income, she can probably make the maximum annual contribution of $2,000 to a Roth IRA, too.

KOBLINER RECOMMENDS: Liz should consider her 401(k) and Roth IRA investments as part of her fixed spending. The 401(k) contribution already comes out of her paycheck; she should make her Roth IRA just as hands-off. If she opens a Roth IRA with a no-fee provider, such as Charles Schwab, Vanguard, or Fidelity, she can request that the money be withdrawn from her checking account each month. And she'll be able to pick the investment from a host of choices. In that account, Liz should start with a broad-based index fund like Vanguard Total Stock Market Index Fund. That will give her a firm foundation on which to build.

All this won't be easy — cutting back never is. If Liz finds herself unable to rein in her spending, she may need to take a hard look at what is making her spend the way she does. (Note: See how Debtors Anonymous helped Anna control her spending.)

If she can follow this game plan, though, it could give her the freedom to do the things she really cares about in the long term: take more time for her writing, or even buy a roomier apartment for herself and her cats. By sacrificing today's less important indulgences, Liz could afford to pamper herself in much more serious ways down the line. And that's what financial planning is all about.