Last week I asked readers of my Yahoo!Finance column “Can You Live on One Income” to send in their savings tips (there are also loads of smart savings strategies in the comments below that column). Here are the highlights of reader emails:
Keep Track: I use Excel as a tool to create and manage my cash flow. My budget is based on what I can realistically save over the next 24 months. It took me about six months to develop enough data to track my baseline expenses and normalize recreational and incidental expenses. I am still working on the cash flow management issues with bonuses and windfall income, but I have a much better chance of keeping self control if I hold myself accountable by tracking credit cards and savings.
I use my monthly budget and add in EVERY expense from going to the movies on the weekend, to buying plane tickets to see my family. I can accurately predict how my savings over the next year will be affected if I buy that extra cell phone data plan, or that $80 dinner. It puts everything in perspective when I look at my books every week to see where I am, compare it to where I thought I could be, and then adjust expenditures to get where I’m going.
One of my goals is that I’m “financing” a $30,000 wedding for next May. This is a constant iteration of choosing venues, catering options, and various luxuries and services that come with each. I could wait until next May and use credit for most of it, or I can start making payments now and avoid all the interest. Every dollar I spend today is that much harder I’ll have to work tomorrow to make up for it. It’s a nice goal and when I meet the goal I can celebrate with a beautiful day.
Other goals include building and maintaining an emergency savings fund, paying off all my debt, and of course early retirement. If you don’t give yourself a real measurable goal, track your progress, AND hold yourself responsible, then there is no way to feel successful. Success is a novelty in itself.
If you challenge yourself to beat this debt-driven, consumer-obsessed society then you get three things: A) Your definition of success will be a healthy path toward rewarding self actualization. B) You won’t need that new pair of shoes to feel good about yourself. C) If shoes are what you really want, then you just might be able to go out and get them DEBT FREE. –Bryan Adamson
Skip the Latte: I’m sure you are familiar with this speech. This whole thing that we must all have a huge Starbucks, (or someone else’s), deluxe coffee, every day, and at least one a day, is a surefire route to financial failure and health failure.
A 16oz, non fat, latte is about $5. How much the huge ones, covered in whipped cream cost, I’m not sure, because I leave them alone. I live beside a coffee shop, and was drinking maybe two a day, plus my girlfriend had the 16oz green chai drink (far too sweet to resemble anything real!). So $10 a visit. Do this 5 days a week, $50, every week of the year = 50×52 = $2600 That’s alot of money!
Making my coffee at home has done three good things for me: 1. More money 2. In a couple of months, I have become markedly thinner, (isn’t that what everyone wants anyway?) 3. Don’t waste time standing in line in the coffee shop, listening to all the other people I don’t want to hear anyway. –J.C.
Don’t Be A Food Snob: Tips that help me:1. Pay your bills the same day they arrive in the mail.2. Pay your credit card online, you can make four payments/billing cycles a month, which makes it in smaller chunks instead of one big bill. 3. Consignment and Good Will are fun places to shop.4. Only go grocery shopping once a week.5. Do not be a “food snob” and shop at the fancy grocery store; but don’t drive all over town to save a dollar off coffee either. Stock up on two-for-one deals.– Lori, Florida
Find Frugal-Minded Pals: I grew up in Taiwan. My sister, brother and I all save about 60 percent of what we make every month. 1. Cut spending on clothes (especially on designer items).2. Cut spending on cell phone (I use my cell phone only receive phone calls; I always use Skype to make phone calls). 3. Make friends with those who are frugal (but of course also those who believe in big dreams).
My brother is 31. He is an elementary school teacher, making about $1,000 a month after taxes. He saves $600 a month and after five years of working, he had saved $30,000. Together with his wife, they put $60,000 down to pay for a $150,000 four-bedroom home. My little brother never spends money on clothes, doesn’t travel overseas. He occasionally buys the latest digital things, but not often. My sister is 36. She works in an elementary school as an administrator. She makes about $1,500 a month. After ten years of working, she saved about $100,000. –Jennifer
Save on Utilities and D-I-Y: I never buy high octane gas, yet my last car had well over 200,000 miles on it. I figure I save at least $100 to $200 or more a year.
I used to eat everyday in the office cafeteria and easily spent $50 a week between lunch, coffee and a snack. Now I brown-bag my lunch most days of the week and save at least $1,500 annually.
In the winter while I am at work, I turn my thermostat down to 60 degrees. In the summer time I put it up to 80 degrees. It’s on a programmable thermostat so I don’t even have to think about doing it. It’s programmed to go back to a normal temperature by the time I get home. I save hundreds of dollars per year.
I do as many projects around the house as I can rather than hiring a contractor. For example, an electrician recently gave me an estimate of $400 to hang a chandelier. I figured it wouldn’t take him very long to do it and thought $400 was too high a price. I shut the electricity off at the circuit breaker and installed it myself in about an hour saving myself $400.If I go out to a restaurant, the portion of my meal is usually more than I can eat, so I ask for a take-out carton and eat the other half of the meal the following day.
When I wash clothes, I use the cold water setting which cuts back on the gas bill since the hot water heater never kicks in. With the dishwasher I keep the heated dry button in the “off” position which saves some on the electric bill.
When the weather is nice, I wash my car myself and save the $6 that the car wash charges.
I use my credit card for almost all purchases since I get 3 percent back on many purchases including gasoline. I hope these tips are helpful. –Patrick
Justify Your Purchases: I appreciated your article on ways to budget more effectively for the downturn. I also say to people justify your purchasing. When you go to buy something and make this decision mentally before you buy. The question has to be “Do I really need this item?” or can I live without it for a little while. In most cases about 90% of the time you can live without it. It saves a lot of cases of buyer’s remorse. You don’t have to feel guilty about buying something if you don’t buy it in the first place.
Figure it out in your head: How much did you have to work to earn enough to pay for the item? Is it worth it to spend this amount of effort to buy something you can wait for? In most cases you can talk yourself out of the item. I guess the biggest thing is common sense. Just because your neighbor has something doesn’t mean you have to have it too. Maybe they can’t afford it either! –Tim
Establish Good Credit: I’m in finance, so I tend to be a little paranoid about debt. Yet you must establish a decent credit rating in order to be able to purchase a home, car, etc. I have one credit card with a reasonable limit. When I must make a purchase on the credit card, I go home and deduct the amount of the purchase from my checking account. That way, I know I’m still doing everything I can to build a great credit score, but I also know I will have the funds available to pay the bill at the end of next month without incurring costly interest charges. It’s not much; more or less just a mindset shift, but it’s helped keep both my husband and myself free and clear of credit card debt. –Megan, California
Use Cash At the Pub: When I am going out for a night on the town and I always pay cash at the bar. It’s not too bright to leave a credit card at the bar when you’re drinking — it’s a good way to get skimmed. Once when I forgot to bring cash, the bar had an ATM inside with a $2 transaction fee. The nearest no-fee ATM was 7 miles out of my way (14 miles total). I paid the $2 fee since I drive a huge SUV. –Paul, Texas
Paul: Just a tip – if there’s a convenience store nearby, use your debit card to buy a pack of gum and get cash back to avoid the ATM fee. Also check out Kiplinger’s quick read called “How to Save $451 a Month.”
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May 24th, 2008 at 12:09 pm
My husband rides his bike to work almost everyday. He has lost weight and last year we spent less than 1,000 dollars for the whole year on gasoline for 3 cars. I also telecommute.
November 10th, 2008 at 8:10 am
Here are my saving tips:
To who has a PC with broadband
Cell phone prepaid, pick the cheapest but good business and use your PC do my call over IP. like vonage , skype etc
Food: besides the week flier buying a bigger bag or a bigger can mo save money most the time, for example a bag of 4 lbs of sugar cost $4.00 therefore a pound of sugar cost $1.00
a bag of 2 lbs of the same sugar cost $ 2.40 therefore a pound of this sugar cost $1.20 , buy a 4 pound bag instead of a 2 pound bag . look at the price per lb or per oz. for everything, even when shopping for meat, never buy fillet mignon to make roast beef.
November 10th, 2008 at 3:30 pm
Another good way of helping your pocketbook is to take your own grocery bags to the the store with you every time you shop. Most stores will give you a credit of 5-7 cents per bag you use. They will even give you the credit on their bags you bring back. This is good for both you and the Earth.