Financial Tips

Consumer Credit : Dollar Savings Adds up to Big Money

A Dollar Saved Here and There Adds Up to Big Money

I have been providing advice in this space that, when followed, can save you a lot of money. For the most part, these are the same strategies and behaviors that we teach our clients during one-on-one counseling sessions at Credit Counselors.

Often, a client will ask, "Is it really worth all that effort just to save a few dollars here and there?" It's certainly a fair question. After all, there's only so much you can do to minimize the waste in your spending habits. And many of the strategies we teach, by themselves, only save a few dollars in the short term.

For example, we suggest you pay cash for purchases and keep your credit card debt under control. While this is good financial strategy, all by itself, nobody gets rich simply by paying cash. Even with a $2000 credit card balance at 15 percent interest, the monthly finance charge is only $25, which may not seem that high.

Other ways to save include insulating your home, thoroughly, and setting the thermostat at 78 degrees in summer and 64 degrees in winter. With a little effort you can reduce your energy costs by up to 20 percent. Still, if you spend an average of $80 a month, those savings only add up to about $16. Again, that's not much by itself.

Nevertheless, I would estimate that combining the strategies we teach at Credit Counselors can save the typical consumer between 10 and 20 percent on their total expenses, when used properly.

If you don't think a 20 percent savings on the money you spend is worth a little extra effort, ask yourself this question: How much harder would you be willing to work for a 20 percent raise at your job?

If you make $10 an hour at a full-time job, a 20 percent raise would increase your weekly take-home pay by approximately $60. From that perspective, it actually makes sense, doesn't it? I guess it's just human nature that an extra $60 a week in your paycheck seems a lot better than the same $60 subtracted from your expenses. And believe me, it's reasonable to expect a $60 weekly savings by managing your money better.

So, how often do you buy lunch at a fast food restaurant? For every trip through the drive-thru, you can save up to five dollars by eating at home. Start packing your lunches and you can save twenty-five dollars a week. Is it worth the effort to you?

How many times a week do you withdraw money from an ATM? At a dollar or two per transaction in service charges, you could save four or five dollars a week just by driving an extra few minutes to use the ATM at your bank and making fewer withdrawals. Now is it worth the effort?

Do you clip coupons from the Sunday paper? If you do, you might be able to save five dollars or more a week. Do you keep your car tuned up and the tires fully inflated? That's another few dollars a week in gas costs. Do you turn the lights out when you leave a room? Do you make long-distance phone calls when the rates are cheapest? Do you compare prices when shopping? Are you beginning to get the picture here?

If you think about it, these techniques really don't require as much discipline and effort as you may think. However, you do have to change the way you think about money. Once you make that step, the rest is easy.