There are plenty of ways to save in a tight economy

By Heather Warlick

Published: August 25, 2008

When gasoline prices go up, so do the prices of most everything else. As expenses skyrocket, paychecks have a way of stagnating.

In today's economy, saving money and finding creative ways to generate extra income can mean the difference between feeling out of control and desperate, or maintaining financial control.

There are hundreds of ways to save money, but many require sacrifices that can lead to blowing your budget.

"All of us have this little rebel inside of us where, if we feel like we're suffering, we're going to rebel against that,” said Jennifer Wallis, vice president of Consumer Credit Counseling Service. Wallis writes a monthly column for Betterbudgeting.com in which she shares tips for managing finances, saving money and financial planning.

"It's the same concept as diets. Eventually ... at some point, you're going to fall off the wagon and break your diet. It's the same with budgeting.”

Sissy Osteen agrees. She is an associate professor at Oklahoma State University, where she specializes in resource management.

"I never feel that it's right to suggest to anybody that they give up anything,” she said. "I usually start out by saying, ‘What is the one thing that you're not willing to give up?' People can usually identify that.”

If your main source of entertainment is your cable TV package, you may not want to slash that expense. Identifying which extravagance is most important to you, such as cable TV, a health club membership or high-speed Internet, helps you identify what you can live without.

Wallis and Osteen said the first step toward saving money is to figure out exactly where you're spending it. For several weeks, track every item you buy, no matter how insignificant. Often, it's the little things you can cut back on and save big money in the long run.

For example, if you buy two $1.50 drinks from a vending machine at work each day, you're spending $60 per month or $720 per year. Seemingly small purchases can end up costing big money when they are added up.

Break down your expenses, and you can find practical ways to meet your needs and desires, such as taking a 12-pack of soda to work each week.

Here are more ideas from Wallis and Osteen for saving money and generating more money.

1.Start with the basics. After you've kept track of daily expenses for a while, you can slash unnecessary things. Next, look at your bills. You can't cut out your mortgage, rent, electricity or gas. But you probably receive monthly bills for things that you can eliminate or at least downsize.

Instead of cutting out your favorite things, compromise and find ways to do what you want while saving money. You might keep your cable TV package but downsize it from the all-inclusive to the basic package that includes your favorite channels.

You might consider dropping your home phone service, especially if everyone in your family has a cell phone.

2.Walk it off. A good way to compromise and save money is to cut out your health club membership. Exercising at home with a DVD or just going for daily walks around the lake or neighborhood can save hundreds of dollars each year. Better yet, it's a way to meet your neighbors and spend more time with your family.

3.Be gasoline greedy. Carpool to work and consolidate your traveling for errands. If you need to go across town for something, try to take care of three or four other things while you're out.

Do you live in an area with good public transportation? Some cities, such as Edmond, have good trolley services to help you cut down on driving.

4.Pay with cash. "For a lot of people, cash feels more like real money than a debit card,” Wallis said. "If you have to whip out $100 in cash, it feels a lot different than putting $100 on your debit card. It might be a deterrent to spending so much money if you have to use your cash.”

5.Pay your bills by priority. If you are in a tight financial situation and must choose between paying your mortgage or getting pesky collectors to stop calling, pay the mortgage, Wallis said.

"You have to think about the consequences of your bills. Homelessness is a lot more important than having collection calls on a credit card,” she said.

6.Take your lunch to work. You may spend $5 each workday on lunch ($1,300 per year). Reduce that to $2 per day by taking leftovers or an inexpensive frozen dinner from home ($520 per year); you would save $780 per year.

7.Entertain on the cheap. Activities such as bowling or movies may not seem expensive, but add the cost of popcorn and soda, or rented shoes and a pitcher of beer, and you've spent $15 to $20 or more. Eating dinner out is a huge waste of money if you are just trying to have fun with friends or family.

Instead, invite your friends over for an evening of food, rented movies, board games, television, swimming or other cheap entertainment options. Have each person bring a small dish and make it a buffet.

Everyone will be fed and have fun, and nobody will have to foot the entire bill.

8.Try new things. Don't meet your girlfriends at the mall to hang out for an afternoon, Wallis warns. The temptation to spend money at the mall is often too great for even the most disciplined budgeter. Instead, get adventurous. For instance, Wallis recently discovered the joys of fishing.

"It's like $3 for a box of worms, and that's entertainment for the whole afternoon,” she said.

Maybe she wouldn't have thought of fishing before she decided to spend less money, but now that she's tried it, she loves it.

Maybe you'll love kayaking or disc golf or rock climbing. If you don't get out and try it, you'll never know.

9.Trick yourself. "There are all kinds of ways for people to play games with themselves,” Osteen said.

With a big expense coming up, such as back-to-school shopping or a birthday, buy a prepaid debit card to make sure you don't overspend and you have the money you need. If you plan to spend $150 on your child's school clothes and not a penny more, start buying $50 debit cards each month three months before you plan to shop. Then only use those cards to buy the clothes.

"It's a good way to get the money out of your account and out of the way of being tempted by it.”

10.Use generic and fresh ingredients. Cooking at home saves tons of money, and you can save even more by buying store brands. They usually are just as good as their more expensive counterparts and often cost half as much.

11.Shop smart. Shop at consignment stores such as The Children's Orchard, where gently-used children's clothing is sold for a fraction of the original prices. You can find great deals on clothes and household items at thrift stores and garage sales. If you don't like the idea of wearing secondhand fashions, plan your shopping wisely. Wait for end-of-season sales, tax-free weekends and Internet bargains.

12.Have a "can-do” attitude. "I'm a complete ‘do-it-yourselfer,'” Osteen said.

When her carpet needed changing and her tile floor needed repair, she did it herself.

"I've completely remodeled my house. I started with small projects and made sure I did my research.”

By doing the dirty work herself, Osteen has saved hundreds of dollars and gained confidence in her abilities.

But remember: You are not qualified to do all tasks.

"I wouldn't do anything that scares me. It took me a long time to work up to doing some electrical work, because electricity scares me. I would never work with gas, because it scares me. I think you need to get a professional to do that.”

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