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Ways to Save Some Real Money

Forget cutting out your daily coffee—here is how you can save a huge amount of money

A lot of people encourage others to save by telling them they should cut the simple pleasures out of their lives that brighten up their days. If you want to cut your daily delights like your cup of coffee or your latte, that is up to you. Cutting a $2 coffee each work day can save you a few hundred bucks each year if you make your own, but how would you like to keep your small pleasures and focus on saving thousands of dollars instead? If this appeals to you, read on.

Be Careful What You Put on Credit

When McDonalds experimented with allowing people to pay for their food with credit cards in their restaurants, they found that people spent 56% more than when they paid with cash. Other studies have shown that when people use credit rather than cash, people's spending at vending machines and what they are willing to spend on event tickets doubles! Overall, though, people's spending seems to go up 12% to 18% when credit is used rather than cash. So if you're one of those people who pay for everything with a credit card in order to collect points or cash back, you could save well over $3,000 a year by paying with cash instead (this is assuming you are an average Canadian household, but even if you're not, you can still save quite a bit). Oh yes, what about the points or cash back? If you have one of the best cash back cards in Canada, you'd only get back $400 for the more than $3,000 in extra purchases you're likely making.

If you still want to get your points or cash back, their is a way to still get them and protect yourself from your human tendency to spend more. Here's how to do it:

  1. Only pay for fixed expenses with your credit card. Fixed expenses are determined in advance and there is no room to spend more just because you feel like it. Fixed expenses include such things as fuel for a vehicle, a gym membership, subscriptions, insurance, scheduled vehicle maintenance, etc. While groceries are a fixed expense too, there is so much opportunity here to spend more than you need to, that this one is best taken care of with cash.
  2. When you do want to put a one time purchase on credit, give yourself a few days to think about and talk about it with your partner or a friend. You want to give yourself time to reconsider and seriously take a look at alternatives. In the end, if you determine that you need this, you've made room for it in your budget, and you've talked with someone about it - including alternatives - then you're far less likely to spend 12% to 18% more on this purchase.

Take Fewer Grocery Store Trips

Keep a grocery stash. By stockpiling groceries, you'll not only be able to purchase more items when they're on sale and save them for later (just stick meat and bread in the freezer), but you'll also be able to make use of Leamy's other big idea: Skip shopping trips. She says that many people can get by on the food they already have for a week, so why not skip shopping once a month or once a quarter? If you're used to shopping very week and spending $7,500 a year, then skipping the trip once a month could save you $1,800, or 24 percent of your annual grocery bill.

Elisabeth Leamy, author of Save Big: Cut Your Top 5 Costs and Save Thousands!, recommends skipping at least one trip to the grocery store per quarter. By creating meals out of the food already at home, she estimates a typical family that shops weekly and spends $7,500 a year can save $600 a year. If that family can skip one trip a month, the savings will come to $1,800 a year.

Stockpile Food

If you have room in your pantry and an extra freezer in your basement, you can take advantage of sales and buy in bulk at the reduced price. Then, you can save the extra chicken—or bread or ice cream—for another day. Leamy estimates stockpiling can save almost $6,000 a year.

Use Online Coupons

By using online coupons from a website such as www.CouponMom.com instead of relying exclusively on the circulars that arrive with your Sunday newspaper, Leamy says that you can save time—and money. She suggests searching www.CouponMom.com once you know what you want to buy (say, Nestlé chocolate chips) to identify sales before shopping. Leamy estimates the typical family of four can save almost $8,000 through creative couponing.

Price Match

Wal-Mart, Target, and other big stores (and the occasional mom-and-pop one) often match the lowest prices of competitors. That means you don’t have to run around to multiple stores to get all the best deals. Leamy recommends bringing circulars on shopping trips just in case you need proof.

Buy Used Vehicles

“Cars these days are really well built, so the risk is lower than it used to be,” explains Leamy. Since new cars depreciate significantly as soon as you drive them off the lot, buying used is a much better financial choice, she adds, and can save drivers tens of thousands of dollars.

Get Rid of One Vehicle

Government statistics show that the average vehicle owner spends around $9,000 a year to own, operate, and maintain their vehicle. Your vehicle may cost less than average, but you can probably see the point here. Imagine how much you could save if you could get rid of a vehicle and do something else instead? The savings would be huge! Could you move closer to work and walk? Is taking public transit an option where you live (it's 80% cheaper than owning a car)? Could you carpool, car share, or do any combination of these alternatives?

Make a Deal

Leamy says home buyers (and sellers) should negotiate with their real estate agent so the agent takes only a 2 percent commission, rather than the traditional 3 percent. For a $250,000 home, that will save $2,500.

Appeal Taxes

When home values go down, the assessed property taxes are often higher than they should be. In fact, Leamy says that 60 percent of homes are overvalued for property tax purposes, but only 2 percent of homeowners bother appealing those assessments. A successful appeal can save thousands of dollars.