Money-Saving Tricks

Money-Saving Tricks from the Editor of "Living on a Dime"

Tawra Kellam

ight years ago, my husband and I found ourselves $22,000 in debt as a result of medical-related bills, unexpected expenses and poor financial choices. At the time, our average income was about $20,000. With two kids and a disability that doesn't let me hold a regular job, I knew I had to be very crafty and reprioritize my life. I learned that self-discipline is cumulative -- you get better at it over time.

Result: Within five years, we had paid off all our debt.

Our secrets...

TRIM FOOD BILLS

Stop eating at restaurants. It's one of the top sources of overspending for people who have trouble saving. You easily can save $2,000 to $4,000 a year by eating at home. A family like mine could spend $72 a month just on sodas at restaurants.

My family hasn't sworn off restaurants entirely. We limit them to birthdays and anniversaries, and we avoid items that pad the bill, such as appetizers, drinks and desserts.

Helpful: Come up with 10 basic dinner menus that are tasty and easy to make. Rotate them each week. Otherwise, you wind up going to restaurants because you're tired from work and don't want to think about what to cook.

Buy large quantities of ingredients on sale, and freeze them. The prices of meats that are still fresh but near their expiration dates, for example, drop by 50% to 75% at most stores, and sometimes they can be as little as 39 cents a pound. Two essentials to help you keep perishables...

Vacuum sealer. It shrink-wraps food, keeping it fresh up to five times longer than foil or plastic wrap. Cost: $75 and up, at Target and Amazon.com.

Alternative: Zipper-sealed plastic bags and a straw. Zip the bag almost closed, then insert a straw and suck out the air. Do not use this method with raw meat or poultry.

Energy-efficient stand-up freezer. It can cost about $400 but consumes only a few dollars of electricity a month. Available at Best Buy, Sears and major appliance stores. Avoid chest freezers -- it’s hard to see what's inside and easy to lose track of what you put in there. Helpful: Use tape and a marker to label food when you put it in the freezer.

Annualize savings. To help cut back on extras, I figured out what they cost per year. For instance, eliminating one bag of potato chips a week from my grocery bill saved us $104 over the course of a year. Cutting out one liter of bottled water a day saved $456 a year.

MANAGE MONEY WISELY

Visualize it. My husband was the spender in our household. It was hard for him to find the discipline and awareness to save until he saw positive progress -- and kept seeing it -- on paper.

On the refrigerator, he posted a graph showing our progress toward our savings and debt-reduction goals. He updated the graph about once a month. Seeing our success inspired him to continue saving.

Take small steps. It's unrealistic, for example, to reduce your food bill from $600 a month to $250. Instead, start by trying to spend $25 less a month, then $50 less, etc.

Calculate the cost in work hours. Tempted to splurge? Calculate how long you would have to work to afford it. For example, my husband would like a home theater, but after calculating the cost of his friend's setup, he figured out that he would have to work full-time for four months and put every dollar of income over that time toward the cost in order to afford it.

Play the credit card game. The proliferation of credit cards with no interest or very low interest rates on balance transfers is a godsend to people trying to save. A key reason I was able to get out of debt was that I paid just $1,900 in interest over five years. I reduced most of my card rates from 21% to no more than 2% by transferring balances numerous times. I went from paying $100 a month in interest to $15 a month. I received most offers in the mail, or I called the card companies until I found the best deals. Important: Zero-percent interest on your balance doesn’t mean that you get six months or a year off from debt reduction. You need to maintain a steady level of payment from beginning to end.

Choose your money battles with your spouse. You can't argue over every dime, or saving money becomes too stressful. We agreed that we didn't have to discuss small purchases for necessities (basic groceries, gas, etc.). I also recommend allowing some amount of personal money for each spouse to spend "no questions asked." We didn't do this in the beginning, because we were on a tight budget, but later, we allowed ourselves $25 each per month. The amount a couple chooses depends on their income and how fast they want to pay off their debt.

CUT DOWN ON CLUTTER

I have determined that being neater and more organized saved me at least $1,000 a year. You don't realize how much money you waste buying items that you already have but can’t find.

Examples: I threw out a lot of spoiled food because it went unnoticed in the back of the refrigerator.

My favorite strategies...

Schedule a family "pick-up time." Before bed each night, I set an egg timer for 10 minutes, and each member of the family has to put away as many items as he/she can in that time.

Estimate how long each task takes. You're more likely to stop procrastinating if you time how long a chore actually takes you. People usually spend more time dreading a task than doing it.

Examples: It takes one minute to make the bed... three minutes to unload the dishwasher... five to 10 minutes to clean the bathroom... five minutes to go through the mail and dump and file.

Have rules for getting rid of stuff. When the kids' rooms get messy, we put the things they no longer play with in a box in the garage. If the kids haven't asked about those toys for a few months, we give them away. The same goes for me -- if I haven't worn an article of clothing in the last year, I give it to charity.

Bottom Line/Personal interviewed Tawra Kellam, editor of the free, twice-weekly E-letter Living on a Dime. www.livingonadime.com. Based in Wichita, Kansas, she is coauthor, with her mother, Jill Cooper, of Dining on a Dime Cook Book (Newman Marketing).