Since economists are now saying the U.S. is officially in a recession you might be thinking of your own economic bailout. Perhaps your retirement fund or stocks have taken a beating. Perhaps you are facing layoffs at your job. Perhaps you are just plain nervous, and you are wondering how you're going to start or beef up your emergency fund.

One thing I had to learn, and learn quickly, when my wife became disabled and we became a one-income family was how to cut costs to "create" additional money in our spending plan. With that being said, I give you my plan for saving $1,000 next year. After all, we could all use a little more money, right?

1. Ditch your video memberships. Perhaps you have a video store membership, game store membership or a Netflix membership. Netflix has a cheap $4.99 a month plan, but it limits rentals to 2 DVDs a month. The $8.99 a month plan allows unlimited rentals. Better: check out videos from your local public library, or watch the free fare at a site like Hulu.com. Savings: about $108 over 12 months.

2. Say goodbye to Starbucks. I've never understood the attraction of paying $4 for a cup of coffee. It seems others are starting to feel the same way. Starbucks has been test-marketing $1 cups of regular ol' joe. Better: Pay $8 for a canister of coffee at the grocery store and brew your own. You can even find the flavored creamers and syrups at stores like Target or Sam's club. If you grab Starbucks on your way to work five days a week, that stuff really adds up. Save it for a special treat on the weekends if you must. Savings: about $685 dollars over 12 months, assuming you were hitting the 'bucks each weekday. This savings represents the cost of Starbucks once a week instead of five times a week, and the cost of purchasing coffee at the grocery store.

3. Have a meatless meal. Instead of eating dinner with meat every night of the week, try a meatless dish such as vegetarian chili, vegetable lasagna or a meatless soup with a pita and humus. Hey, I'm a carnivore, but I like these dishes occasionally, too. Assuming a package of beef costs about $8-10 bucks these days, the savings will add up. Savings: $416 over 12 months.

4. Smoke less. Notice I didn't say "quit smoking". Yes, it's terrible for your health, but you already know that. If you just can't (or don't want to) quit, at least try to cut back. Hey, it's better than continuing to smoke as much, or more, than you are now. Start by trying to smoke 2 fewer cigarettes each day. That's a pack less each month. Better: quit, it you can. Savings from smoking one less pack each month: about $50 over 12 months.

5. Use flourescent light bulbs. Yes, it's supposed to be better for the environment, but I like those compact, funny-looking compact flourescent bulbs because they use a lot less electricity. I have replaced almost every lightbulb in my house with them. Another benefit: they last a lot longer than the regular lightbulbs, offsetting the higher cost of the CFLs. I save about $10 a month on electricity. Savings: About $120 a year.

Total savings: $1,379.

Hey, look at that. We saved more than $1,000 in 2009, and it wasn't really all that painful. The point isn't for you to follow this plan EXACTLY (although you could if you wanted to). It's meant to get you thinking of the small changes you can make to your spending that add up to big savings over the course of a year. Almost all of us have area where we can cut back on spending, even if it is a small amount. Bank that $1,379 in a high-yield online savings account drawing 4 percent interest, and you'll actually make about $40 off the savings over the course of a year without doing anything other than not spending the money. Use this money as an emergency fund or to pay down debt.

You'll also notice that these aren't drastic life-altering changes. That's intentional. I hate reading personal finance advice that dictates we should all live like paupers and eat nothing but peanut butter and jelly sandwiches from the brown bag we take to work every day. First of all, most people aren't going to do that. Secondly, even if we have every intention of making huge, life-altering changes, it is hard to stick to them. That's why the dieting industry makes millions of dollars every year, and Americans are fatter than ever.

Make a few baby steps in 2009. It will add up, and you won't fell deprived.

1 comments

  1. frugal living central // February 15, 2009 at 10:27 PM  

    One more thing people can do is stop buying the newspaper. Many times I take the train or bus to find the daily paper left behind. What a waste of money!
    Many papers are now online so you can read it there. Another option is to read it at the local library. Or if you are fortunate to find it while traveling to or from work, have a read on someone else's tab.

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