Since saving money and getting out of debt are some of the most popular New Year’s resolutions, let’s talk about 5 ways you can spend less in 2011. These aren’t specific purchases or shopping tactics, per se, but big picture things that will make more money available in your monthly budget. My family did every single one of these as we got out of $50,000 in debt in 2.5 years.
Track Your Expenses
Tracking expenses is like counting calories in that the simple accountability of recording and reviewing what you spend will make you spend less. But, gone are the days of tedious data entry into Excel spreadsheets or even into Quicken. I really like Mint.com as a free, secure online expense tracking tool.
You connect your financial accounts to Mint.com and it automatically records your spending and attempts to categorize it. You get tons of charts and graphs showing where your money is going and can even be sent emails when you approach monthly budget limits per category. I wrote much more about Mint.com a few months ago if you want to hear more about what it can do for you and what other readers have to say about their experience with it.
Adjust your Tax Withholding
Many Americans opt to have a lot of income taxes withheld each pay period as they look forward to a hefty annual tax return. Many of those same families are in credit card debt and struggling to make ends meet on a month-to-month basis. Change your withholding to minimize your refund, without you actually having to pay in to the IRS at year-end. Use the IRS’s tax witholding calculator to help you figure out the correct withholding.
People often ask me, “what was the most impactful thing you did to reduce expense when you got out of debt?” My answer is always the same, “adjusted our tax withholding.” We were of the big-is-better mindset where tax refunds are concerned and at the highest we got almost $7,000 back one year; that is $583 per month that we could have had in our family budget. Even a more modest tax refund of $3,000 is $250 per month that you could use to avoid credit card debt, pay down existing debt or save for emergencies.
Shop Differently for Groceries
One area of focus for us at Pocket Your Dollars is grocery savings. We put effort into helping you spend less on groceries because the impact is felt as soon as you leave the store with more money in your pocket, but also because groceries and household products are one of the largest discretionary line items in a family’s budget. You choose what to buy, how much, where you shop and all of those influence how much you spend.
Yes, our weekly shopping lists help you know which items are on sale at good prices and have corresponding coupons, but shopping that way isn’t for everyone.
If you’re not a coupon shopper, then consider Angel Food (or Fare for All if you live in Minnesota). These organizations sell groceries at 50% of what you’d pay at the store. Each buys in bulk or cooperatively, then as non-profits, they pass the savings on to the consumer instead of marking up the products for profit. You buy food by the box with a pre-selected assortment of the basics including meat, vegetables and other staples. It’s easy enough that anyone can do it.
Think About Long-Term Costs
Cheap is not always better. When it’s time to make a purchase, whether a new appliance, a house repair, or even new clothes, don’t necessarily opt for the cheapest product on the shelf. Think about how much that product will cost you over time. For instance, CFL bulbs can be more expensive to purchase than their incandescent counterparts, but the energy savings more than make up for it. Clothes that require dry cleaning are more costly than those you can launder at home.
This is so important to me that I have some products that pay for themselves in mind and plan to share those with you in the weeks and months ahead.
Use the Internet As a Resource
The internet empowers consumers by making volumes of information available on pricing and product quality and safety. Before you make any purchase of $50 or more do a little internet research. First, requiring yourself to stop and check the prices elsewhere halts impulse buying, but many products can be purchased online for much less than what you’d pay in a bricks & mortar store.
For instance, eyeglasses, which can run $300 – $400 per pair for adult frames and lenses can be purchased on websites like ZenniOptical.com at prices starting at $8. Websites like PetCareChoice sell pet prescriptions for up to 80% less than what you’d pay at your Vet’s office. Gluten-free grocery products can be purchased from Amazon.com for prices that often beat mainstream grocery stores.
Price comparison is another way to use the internet to your advantage. MyRatePlan.com helps you decide which cell phone or smartphone plan best fits with your lifestyle and then makes price comparing easy to do. We used MyRatePlan.com and realized my husband would be best suited for a pre-paid phone and we made the switch, saving us $40-$50 every month.
Your turn: How about you? What have you done in years past or are you doing this year to make positive change in your finances?
Photo courtesy o5com
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