Latte Drinker or Not, You Can Save Money
By Kristi Vaughan
Bestselling author David Bach has written about the "latte factor," about how latte drinkers can save money by breaking the daily habit of spending money on needless luxuries. But even if you have already shunned this high-priced beverage, you can still save money – in some cases without giving up anything!
Saving starts with spending
You can’t save if you don’t know what you are spending. So take out a pen, paper, calculator and your checkbook. It is time to record and categorize where your money has been going.
Choosing categories can be somewhat subjective but one suggestion is to start with the broad areas of fixed, variable, long term and impulse.
Fixed expenses will be things like mortgage, car payments, utilities, and insurance. Variable expenses could include clothes, vacations, and dinners at restaurants. The long-term area could include such costs as college tuition, retirement and investments (yes, savings and investing should be a regular expense).
The last category, impulse, can cover all those things you buy because you “need” them at the time but if you didn’t have them it wouldn’t truly change your life.
Saving without sacrifice
Before you start cutting back on the frills and impulses that bring a smile to your day why not take a hard look at your “fixed” expenses list. Are these costs truly fixed? Or can you eke out a few dollars here and there?
Here are some suggestions places to look for savings:
Mortgage
If rates have dropped since you financed your home, you may be able to save enough on your monthly payments to justify the cost of refinancing. A bank or mortgage company can give an approximation of closing costs. And you can find refinancing calculators through Web sites such as the American Bankers Association, your local bank or mortgage company.
Fees
Chances are you are paying fees to your bank, credit card company or both. And we are not taking about late fees or penalties here. These are the usage fees that get charged just so you can have that credit card or a checking account. In many cases you can avoid, or reduce these fees.
Banks, for example, often will eliminate monthly checking account fees if you are a good customer. And this doesn’t necessarily mean having a lot of money—just a number of accounts at the same bank. So too is it often less expensive to use the electronic banking option where you rarely, if ever, call on a teller’s services. Ask your bank about ways you can reduce, or eliminate, monthly fees.
Credit card companies, particularly those who “give” something back (like air miles) often charge fees for the card. If this fee exceeds the benefit you are getting, you may want to consider finding a card that doesn’t have an annual fee. Just read the fine print to make sure you aren’t trading "no annual fee" for a higher interest rate on unpaid balances. Web sites such as ASAPCreditCard.com, which is sponsored by several major credit card issuers, compare cards with different rates and rewards.
Phone overlap
Walk down any city street and you can see how ubiquitous cell phones have become. If you double dip in the world of land and cell phones could slight changes in calling patterns save you a bundle?
To see if this is so, look at calling plans for both phone services. Where do you make most of your calls and when do you make these calls? If you have free unlimited off-peak nationwide calling on your cell phone, could you use that phone to call Mom and your former college buds? And do so in the evenings or on weekends?
Insurance discounts
Most insurance companies will reward you for either being a good risk or keeping all of your insurance business with them. But risk isn’t just about whether you’ve made a claim. Many auto insurance companies give discounts to young drivers who maintain good grades or have completed drivers’ education courses.
Homeowners insurance companies will sometimes discount insurance if they know someone is home most of the day. And most companies will provide multi-policy discounts if you have your home, auto, life and umbrella policies with them.
Clip coupons and enroll in reward programs
If you aren’t already taking advantage of the grocery coupons in the Sunday paper or the loyalty programs offered by stores you frequent regularly, you could be missing out on easy savings. Some department stores, for example, reward lingerie shoppers with free items after they buy a certain number. Shoe stores, too. And what about your grocery store, pharmacy or even hardware store? There is even a Web based service, Upromise, that rewards your loyalty to a whole range of products and services with money for college.
Cutting back on the impulses
Okay, so even though you might be able to save by better scrutinizing your fixed expenses, you probably won’t get anywhere financially if your impulse spending is out of control.
The big impulse purchases are easy to spot. They are the motorcycle in your driveway, the warm weather vacation booked the first day it snowed and the surfeit of shoes in your closet. But what about all the little impulses that come up on a daily basis?
It is, admittedly, the dollar here and the dollar there that can add up to significant amount of money by weeks end. Let’s say it is $20. Over a month it is $80 and, by the time a year has passed it is $1,040. And you probably can’t even remember what you spent this money on.
There are a couple of ways to harness impulse spending. One is to limit the amount of cash you carry around. Chances are you’ll think twice before writing a check or whipping out a credit card for a $5 expense.
A second possibility is to be diligent about writing down what you spent money on, how much and when. Perhaps you will see a pattern and then, much like a dieter trying to lose a few pounds, you can alter your lifestyle to avoid those temptations!
