I really think what it comes down to is what we see as a need and a want. When we take our wants and make them needs, we become imbalanced in our budget and find ourselves in debt unless we make enough money to cover those wants. For example:
Need: Roof over your head
Want: 3 bedroom house, 2 bathrooms, big yard, quiet street, two car garage
Reality: We may need to decrease our view of what we will end up getting in a home because we can't afford our "want" so maybe we get a 2 bedroom with a basement that we can work on, 1 bathroom and a bit of a busier street with on street parking
Need: Clothing
Want: New fashionable clothing
Reality: Our budget is small for clothing and we can either pick up one or two expensive pieces or we can start thrifting and see what we can find in the thrift store or inexpensive places on sale (Macy's is GREAT for this). We may not be able to get Uggs but we can get "fuggs" - store brand knock offs. They are still warm without the brand name or price tag.
Need: Food
Want: Steak, organic veggies, raw milk, pop tarts
Reality: We may have to look into only getting the "dirty" veggies as organic and get the ones that we peel/wash/process in regular. We may have to cook vegetarian and maybe a bit of pasta/rice/potatoes to stretch the dollars. Skip the expensive extras and go for good healthy real food in season with prep and keep it simple. Make your own desserts to satisfy the craving for sweets.
Need: An outlet for fun
Want: TV, computer, Xbox, expensive car, new golf clubs
Reality: We may have to find used golf clubs, grab the working TV out of someone's garbage or look on Craigslist (there are a LOT of TVs that people are getting rid of that work fine but they "need" the newest and best), use the computer at the library and learn to play solitaire with real cards. Also checking into free things in your area is a great way to do fun things for nothing. Finally, learn the fun of just getting together with other people and playing games. We did that this week with spending just $10 on some food and everyone brought stuff and we played a GREAT game that just took some pens and paper to play.
http://www.greatgroupgames.com/fishbowl.htm
When we start really measuring the things that are wants and needs, we begin to see where we can cut back to be able to stay within our budget, pay down debt and even start saving.