Keep SimplifyingTake care of your money

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Unless you have an unlimited supply, you have to worry about money. You might not feel that you have enough. But do you have what you need?

Beware of the "golden handcuffs." Beware of a profession that pays you so well in money that you enter into a lifestyle (house, cars, a great deal of stuff) that traps you. You may end up in a vicious cycle of trying to earn more in order to maintain the material things that give you less and less pleasure.

If you've done the hard work in "Rule Your Stuff" and "Optimize Your Place," you may be in a position where your costs are much lower.

TIP: Joe's grocery shopping tips save money.

TIP: Do I have to be a cheapskate?

TACTIC: Save up to hundreds of dollars per month by not having a car.

See "Eliminate big items" for an analysis of car costs.

There are many alternatives to owning a car. Commute to work by public transit. Walk or ride a bike to work or school (this also will help you get regular exercise). You can still have access to auto transportation when you need--use a taxi or rent a car.

If you can't carry your groceries home, see if there is a grocer in town who will deliver the heavy items weekly.

The costs of public transit, walking, and biking supplemented by taxi or rental car should still be lower than owning a car.

If you claim that a car is more convenient and saves time, you need to add up all the time that you have to deal with your car. A car takes your time for everything from time to find a parking spot to bringing it in for repairs or maintenance. You also have to add in the time you work to pay for your car. And the time you have to work to pay the taxes on the money you earn to pay for your car. And time you have to spend exercising because you don't exercise while driving around in your car.

Without a car, you'll also gain the benefit of not having to deal with car salespeople, garage mechanics, and the many other people that make a living off car owners.

TACTIC: Make and pack your own lunch when going to work or school.

This is a habit that could typically save you $50 to $80 a month. It will also improve your diet--you will avoid the temptation to get fast food.

TACTIC: Get rid of "luxuries" you don't need.

Get rid of cable and satellite TV (and the whole TV if you haven't already). Avoid eating out in restaurants often. Or, if you do, avoid ordering a drink other than water--you'll save as much as a couple dollars on the price of the meal. Avoid buying processed or convenience foods. Go to budget movie theaters or go to the movies during off-peak discount times. Watch for free promotions and reduced admission opportunities at sports events, museums, concerts, and festivals. Reconsider an expensive vacation--instead stay in your own town and go to theaters, museums, and nightclubs there. Give thoughtful rather than lavish gifts.

After you've reduced your costs, it will become easier to meet your obligations. Pay off loans as quickly as possible and become debt-free as soon as possible.

TACTIC: Use automatic deposit of your paychecks and automatic withdrawal of routine bills from your checking account. You'll protect your money, save time, and never miss a payment.

TACTIC: Make and keep a budget.

The purpose of a budget is to allocate your funds to meet your obligations. Use a piece of paper or computer spreadsheet to make a chart and:

  1. List the major monthly fixed expenses you have and their amounts: rent, insurance, utilities, phone, or others.
  2. List average monthly costs for other regular expenses: food, recreation, supplies for home, personal care.
  3. List an average monthly amounts for one-time or lump-sump payments you might make during the year such as medical care, travel, or major purchases.
  4. Add up your monthly expenses and compare that to your monthly income. Your life is going to be a whole lot simpler if your income is greater than your expenses. Use the suggestions in this section to reduce your expenses.

You can keep a tighter reign on spending by keeping track of all the money you spend, no matter how routine. Write down how much you spend on miscellaneous items. Buying a cup of coffee, a pack of gum, a newspaper, and lunch every day can add up to a significant monthly cost. Eliminate unnecessary small purchases. By making all your purchases on a single shopping day, you can make keeping track of spending easier and make it less likely that you buy on impulse.

TACTIC: Establish low cost suppliers for routine services and products.

On your shopping day, as you walk about your neighborhood, note where you can get a haircut, mail packages, get photocopies, stamps, used clothing, or hobby supplies. Used clothing or thrift stores often have great bargains. Dollar stores (where everything in the store is priced at $1) often offer new merchandise for a very low cost. Develop your own list of nearby and cheap suppliers so that you can reduce your costs and save the trouble of finding the supplies when you need them.

Look for suppliers on the Internet (see "Tap into Resources"). You might find bargains online that physical stores can't match, although you will have to wait for the package delivery.

TACTIC: Use services provided by training schools to reduce your costs for some services.

Schools of cosmetology, dental hygiene, dentistry, or other trade or professional schools may be able to provide you services, under professional supervision, that can save you money. You may have to spend more time getting your hair cut or your teeth cleaned, but you will save significantly on the cost.

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