Try these easy, down-to-earth ideas for cutting expenses and spending. Then use the freed-up cash to boost your emergency fund.
By Bankrate.com
Perhaps you've intended to start an emergency fund. The barrier has simply been a lack of funds left over at the end of the month to put aside.
To break the paycheck-to-paycheck cycle that's leaving your checking account balance low, examine your everyday expenses and look for ways you could slash unnecessary spending. Start by writing down all your expenses for a month. At the end of the month you'll likely see several money drains that you could plug.
Once you've identified the causes of your dwindling account balance, consider these tips for slashing your spending and freeing cash for your emergency fund. Bank any money you save in a high-yield savings account.
Cut down on phone extras
1. Get back to basics. Consider canceling services such as call waiting, caller ID, call forwarding and three-way calling on your land line. Do the same with your cell phone, cutting expensive frills.
After all, the point of a telephone is to make calls.
2. Call 411 for free. Do you make a lot of directory-assistance calls from your cell phone? Typically, cell phone providers charge a fee every time you call 411.
Instead, you can call 1-800-GOOG-411 (1-800-466-4411) to get the listing you want for free. Another free service, 1-800-FREE-411 (1-800-373-3411), requires you to listen to a short ad before you get your number.
3. Stop going the distance. Drop your long-distance carrier if you make infrequent long-distance phone calls. Instead, use a prepaid phone card, a dial-around service or even your cell phone if you've got the minutes.
4. Examine cell-phone usage. Are you exceeding your allotted monthly cell phone minutes each month or using far fewer minutes than your plan allows? Re-evaluate your calling plan and make changes to suit your needs. If you're paying for a household of users, consider whether everyone really needs his or her own line.
Learn feel-good financial tricks
5. Nix the huge tax refund. That annual $2,400 tax refund may feel great, but you're depriving yourself of $200 every month of the year. (See "Why I hate income-tax refunds.")
Don't give Uncle Sam an interest-free loan. Adjust your withholding allowances so that you're keeping an appropriate amount of money for yourself each month. Put the extra money in a high-yield savings account to make it work for you throughout the year.
Talk back: Do you have an emergency fund?
6. Pay in cash. Unless you're in the habit of paying your credit card bills in full each month, don't use the cards for anything you can eat or wear. Try to pay in cash to make yourself aware of how much you're spending. (See "Your 5-minute guide to credit cards.")
7. Live one pay raise behind. Rather than spending that 3% cost-of-living raise, add it to your emergency fund. And the next time you get a raise, increase your disposable income by the amount of your last raise.
Stretch your clothing budget
8. Shop smarter. Select articles of clothing you can use to make multiple outfits, in versatile colors that are easy to mix and match.
Stay away from trendy clothes, shoes and accessories you won't wear after they're no longer in fashion. Buy items that serve a dual purpose, such as work and weekend wear, if possible.
9. Minimize tailoring and dry-cleaning costs. Stick to buying wash-and-wear clothes when you can, and save the dry-clean-only clothes for special occasions. If possible, try not to buy clothes that need alterations, as those costs can add up, too.
10. Turn unworn clothes into money. Take the clothes you or other members of your family no longer wear -- that are still in good condition -- to a consignment shop. Or hold a yard sale.
Rev up auto savings
11. Plan your errands. Combine errands into one trip and plan your stops for the most efficient route. You'll save yourself time and money.
12. Buy retread tires instead of new tires. Retread tires are cheaper, safe and environmentally friendly. To learn more about retread tires and locate a local supplier, visit the Environmental Protection Agency's Web site.
13. Take it easy. Your vehicle will burn less gas if you accelerate and brake gradually.
Save on insurance costs
14. Analyze your homeowners coverage. Check if there's any coverage you have that you can do without. Consider raising your deductible to save money on premiums.
15. Compare health plans. Working couples can reduce out-of-pocket medical expenses and premiums by carefully comparing the costs of the benefits offered by each employer to find the best deal.
16. Get a break on car insurance for good behavior. Ask about discounts if you've gone a certain number of years without an accident or ticket, store your car in a garage or drive fewer than a certain number of miles each year.
17. Keep a good credit rating. Many insurance companies use your credit rating to determine whether to insure you and how much to charge.
18. Get rid of private mortgage insurance. If you have 20% equity in your home, you could qualify to start saving that money.
19. Adjust your auto coverage. If the kids have left for good, take them off the policy. If they are simply away at college, ask about a distant-student credit. Usually it applies if your child is a full-time student, has gone at least a certain distance to college and hasn't taken one of the family cars to campus.
For students who keep cars on campus, some insurance companies offer "good student" discounts to those who maintain a certain grade-point average.
Eat well for less
20. Keep your eyes open for new restaurants. They typically offer grand-opening specials.
21. Hunt for discounts. Check your local newspapers for advertisements of lunch and dinner specials, as well as early-bird specials. Look for coupons, too.
22. Cut back on your caffeine costs. Stop buying coffee at the chichi coffee joint down the street from work. Bringing coffee from home in a Thermos or brewing it in the break room will actually improve the quality of your morning shot of energy, as well as cut its cost dramatically. You can get 40 cups of coffee from a pound of beans.
Even gourmet beans can be purchased for $8 per pound. If you're spending $2 per day on coffee -- easy to do in most workplaces -- you'll go from spending $500 a year to about $50 by making your own. For the best savings (and flavor), buy whole beans and grind them yourself. Packaged ground coffee can cost a few dollars extra.
23. Bring your own bottle. Take cans of soda or bottled water to work instead of buying them out of a vending machine. Bottled water sells for 14 cents a bottle at a big-box grocery store, and soda is 16 cents a can (less for off-brands). Compare that with the 75 cents or more that you'll spend at the machine and it's a no-brainer.
You can go even further by cleaning your small plastic water bottles and replenishing them with drinking water from a gallon jug or from a household tap. (It's an environmentally friendly move, too.)
Entertain yourself on the cheap
24. Have fun staying home. Tell friends to each bring over a dish and host a potluck, game or movie night.
25. Read not, waste not. Cancel subscriptions to magazines and newspapers you haven't been reading. Or see if the publication has an online version you can access for free or less than a printed copy.
26. Evaluate your cable package. Do you really need 300-plus channels? Do you have time to watch those movie channels you're paying a premium price for? You can always rent movies when you want to watch a particular flick. Switch to basic cable and save a bundle each month.
27. Rent movies economically. Cut down the number of times you rent movies or try an online rental service that charges a flat rate each month to rent a certain number of movies. Shop around to find the best deal that suits your needs.
If you buy movies, check out the "pre-viewed" movies section at the video rental store, which offers previously viewed DVDs at a discount. You might find the same movie at a better price or get deals if you're buying several at a time.
28. Use the library. Besides books, you can borrow movies, music CDs and even exercise videos from the library. Check the selection available at your local library and keep yourself entertained for free.
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There are no fixed rules that you must follow. Just choose whichever that's practical to you.
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