Over the past few weeks, many of us have been busy buying presents and hosting parties. In the process, we've inflicted substantial damage to our wallets -- and livers. But 2004 gives all of us a chance for a new start. And while I can't help with your physical health, I do have some simple ideas that can dramatically improve your fiscal well-being.
The key to saving money is knowing where your money goes. Most of us have no idea. The only thing we do know is that at the end of the month all of our money is gone.
But if we kept track of our money, many of us would be surprised to discover where we spend our hard-earned dollars. Fat-filled lunches from Quizno's, high-rate credit cards, unnecessary insurance. None of these things bring any joy to our lives, but many of us are paying for them.
Here are seven simple steps to help gain control of your budget and save you $7,000 over the next year.
Cut back on eating out. If you go from eating out for dinner twice a week to once a week, you would save around $200 a month, maybe more. As long as you're at it, why not bring your lunch to work instead buying a burrito at the Food Court. Bringing your lunch will save you another $100 a month.
Along with boosting your savings, making your own food likely will cut your waistline since homemade food almost always has fewer calories that restaurant fare. (As a former cook, I can tell you why restaurant food tastes so good: FAT, FAT and more FAT!)
Use a no-annual-fee credit card. If you carry a balance each month, use a low rate card. This can save you $75 per year in fees and over $150 a year in interest charges even if your average balance is as low as $1,000. (Check out Bankrate.com for a list of available no-fee and low interest rate credit cards.)
Watch out for ATM and bank fees. Avoid ATM and transaction fees by using only in-network ATMs and avoiding PIN-based debit cards. Keep your bank balance above the minimum to avoid additional account fees. This can save you $150 to $250 per year in ATM and bank fees.
Raise your deductible on your auto and homeowners insurance to $500 or $1,000. Buy these policies through the same insurance company. This can save you ten to 15 percent, or $200 to $350 a year on these costs.
Compare costs at the gas pump and use regular grade gas. This can save $4 to $6 per fill up, or $200 to $300 per year. Also, keeping the engine tuned, your tire pressure up and your speed down can save an additional $100 a year.
Whoever said talk is cheap never looked at a phone bill. Drop optional services such as answering services (buy a $25 answering machine instead) and don't use directory assistance. This can save you $75 to $100 per year. Also, cancel that extra cell phone, reevaluate your calling plan, or call only during nights and weekends when costs are lower -- this can save you $250 to $500 a year.
If you plan a trip this winter, make sure to book your trip in advance and plan the return on a weekend. This can save over 60 percent on the cost of round trip airfare. Also, if you will need to rent a car, shop around, as prices can vary as much as 20 to 50 percent among the car rental companies for the same car. Check out Orbitz and Travelocity for rental car deals. Also, fill the tank yourself and avoid the insurance add-ons to save even more.
By following these relatively painless steps, a single person would save about $7,000 next year. Imagine an extra $7,000 in your pocket. That's enough for a used care or a solid start on a down payment for your dream condo or house.
Of course, there's one more money-saving tip out there that beats them all. Truly, it's the mother of all money-saving tips. So why wasn't it on the list? Well, because many of us can't use it, and the ones who can generally won't. But given this tips importance, I'll give it a shot. Here it goes:
Stop Smoking. Admittedly, I don't smoke so I can't comment on the difficulty of breaking the addiction. But with a pack-a-day habit running $120 a month, not to mention the other health-related costs that almost every smoker pays at some point, this is a habit you can't afford to keep.