The Motley Fool's Fiscal Fitness Boot Camp is in session! Every weekday this month, we'll walk you through a fresh money-saving/money-making tip as we work toward finding $2,000 in savings you didn't know you had.
My approach to budgeting is pretty simple: Sweat the big stuff.
Big stuff equals big savings. So only after I complete Step 1 -- shaving triple- or even quadruple-digit dollars off my biggest-ticket expenses -- do I bother to move on to Step 2. And as you can probably guess from the title of this piece, Step 2 (and all others that follow) is all about sweating the smaller stuff.
The key is to sweat the right small stuff first so that you don't wear yourself out and give up the savings exercise entirely.
It's not all small stuff
Despite best-selling books pointing out the contrary, not all small stuff is created equal, especially when it comes to finding ways to save money. When viewed through the filter of your finances, it's pretty easy to spot which small stuff to sweat first: Start with the most expensive stuff and work your way down the list.
That's exactly what we've done so far in this month-long Fiscal Fitness Boot Camp. If you've been following along (hi, Mom!), give yourself a hearty pat on the back. You've already done a lot of the heavy lifting ... slashing big-ticket and infrequent bills as well as the biggest monthly budget busters. Let's review our handiwork so far:
- We've slashed our insurance premiums -- both on our cars and to protect our homes.
- We examined the withholding on our taxes and instead of waiting to get a lump sum of what we overpaid to Uncle Sam, we freed up our tax refund to be used to pay bills and pay down debt year-round.
- We made phone calls to negotiate for a lower interest rate on our credit card debt and get a better deal on cable TV in less time than it takes to wolf down lunch.
- And we rummaged around in the attic, garage, and that overstuffed junk drawer and magically turned our trash into cash.
But for a lot of folks, sweating just the big stuff is not enough. Whether out of necessity or just the desire to keep the fiscal workout momentum going, let's take a moment to find a few other places to cut back.
That hole in your wallet loses you $2,340
It sounds ridiculously irresponsible to misplace that amount of cash, but according to a 2007 survey commissioned by Visa USA, nearly half of Americans copped to losing track of that much over the course of a year. One in five reported $25 of unaccounted spending a week, and 7% said the holes in their wallets are so big that they lose track of $100 or more a week.
Yikes.
Of course, Visa's (NYSE:V) own business solution to help customers track cash is to encourage them to use its Visa check card. That certainly makes tracking your spending easier, but as we learned earlier in the Fiscal Fitness series, relying on plastic -- whether a credit or debit card -- psychologically sets us up to overspend. Cash is the best way to curb your urge to splurge.
Other places your cash is hiding
A better way to keep your cash from disappearing into the ether is to guard its value mightily whenever you're in a spending situation.
The truly dedicated cost-watcher knows that there's a lot of spending fat hiding in the nooks and crannies. Here are a few places to start looking for extra cash savings. Of course, everyone's financial situation is unique, so some of these cost-cutting options might not work for you. Still, when you take the time to look at where you could cut back, you might surprise yourself.
Travel-related expenses: Given that travel is one of the biggest budget line items for many folks, shopping around for savings is worth the time. With the average family spending more than $1,600 for summer vacation, according to another Visa survey, trimming costs by just 15% amounts to $240 in savings -- and that's just for the summer trip. Moreover, looking at how most airlines, including Continental Airlines (NYSE:CAL), Delta Air Lines (NYSE:DAL), AMR's (NYSE:AMR) American Airlines, and US Airways (NYSE:LCC) keep pushing up baggage fees, don't expect to see cheaper travel anytime soon. Read "Rack Up the Rewards" for seven tips on getting the most from your miles from a fellow Fool and loyalty travel guru.
Transportation: If global warming and road rage aren't enough to inspire you to put your car up on cinder blocks and start hoofing it, perhaps saving $5 to $25 a week is. Until electric cars become a reality, pump-fillers like ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) will still get a big part of your paycheck. With the average worker's tank guzzling 3.3% of each paycheck (or $1,341 a year), carpooling and public transportation are looking mighty attractive, eh? (Check out eRideShare.com.) If you must fill 'er up, avoid stations in affluent neighborhoods, ones just off the freeway, and gassing up on weekends (when prices are jacked). Check out GasBuddy.com to find pumps nearby with the lowest per-gallon price.
Personal care: So far as I know, no one's done the perp walk for ignoring the "Dry Clean Only" warning label on their garments. Clothing pros say most anything can be hand-washed -- cashmere, linen, and silk included -- so long as it's not lined. (A moment of silence, please, for my favorite lemony yellow jacket.) Save money by spot-cleaning ASAP. Here are some recommendations the clothing pros offer: Dab away lipstick and other shmootz with a baby wipe or delicate detergent on a damp towel. Use a steamy bathroom to destroy all evidence that you borrowed your roommate's silk blouse and let it sit balled up in the corner for a week. Corner-test any garment before soaking and squeeze (don't wring) until the water runs clear. Wash darks inside-out and hang dry (the dryer does the fading). And use at-home dry cleaning sheets (Dryel or Dry Cleaner's Secret) -- a bargain $0.60 per item -- and cut your cleaning bill $1.40 to $5.40 per garment.
Taxes: Organizing your paperwork for tax time can lead to a lower tax bill. (Check out this simple three-folder tax record-keeping system.) The key is taking advantage of all those deductions and credits you deserve. Everyone gets a standard deduction, but that doesn't mean you should take it. Millions of people give up potential tax savings simply because they don't keep records or take the time to itemize their deductions. Especially for homeowners and those with high medical bills, missing out on itemized deductions is hazardous for your financial health. And if you do go with the standard deduction, don't just assume that you should take it on both your state and federal returns, or you could be leaving money on the table. What better time to put it in place than now, at the beginning of the year?
What are you sweating?
Those are a few places to start looking for ways to cut back. I encourage you to tailor your money-saving expedition by scrutinizing how and where you spend your money on a daily, weekly and monthly basis (we showed you how to find your cash flow leaks earlier in this series). Chime in below and tell us what "small stuff" you need to sweat and share ideas for others on ways you've successfully cut back.
Tune in throughout the month for the latest installment of our Fiscal Fitness Boot Camp, as we stay on course to produce at least $2,000 of savings for you.
Budget need a workout? Read on:
