It's painfully clear that Americans are still hurting financially. If there was a magic wand that would sharply raise incomes or reduce expenses, we'd be out there waving like mad. But that doesn't mean there aren't ways to cut and stretch. If you can afford it, give yourself some transition time to get used to spending cuts. Some will come at too steep a price in terms of your quality of life. But others may be painless, and you'll never look back.
1. Know where your money goes. This is my No. 1 obvious idea that many people don't follow. How can you possibly know how to save money if you don't know what you spend it on? There are a growing number of online budgeting sites to help you. Use one, or do this yourself. Whatever you've been spending each month, try cutting it by 5 percent. Then cut it by another 5 percent the following month. Keep it up if you can, and put the savings in the bank or pay down debts.
2. Make a grocery list and don't stray. Once you've tracked household spending, see how much you spend at the supermarket. You probably spend a lot of money on stuff you don't need. In our house, we began downsizing our grocery spending by seeing what we were throwing out and the items that had freezer burn and should have been tossed. This helped sensitize us to unnecessary purchases. (My mom passed away more than 30 years ago and I can still remember her hollering at me about wasting food.) We also save money by making fewer runs to the store. Our greatest savings come when we make a weekly meal plan, create a shopping list for that plan, and buy nothing but what's on that list.
3. Mothball a car. If your household has two cars, try leaving one in the garage for a month. See how it affects your life. With a modest amount of planning, a lot of households might be able to make do with a single car. Once you've determined that you can do likewise, sell the second car, bank the money, and begin enjoying lower bills for auto insurance, gasoline, and maintenance.
4. Find free home phone service. If you have a cell phone, do you really need a landline in your home as well? If you just feel more secure with a traditional phone, why not find a free Internet-based phone service instead of paying extra for what usually amounts to a local calling tool? Some services will link your computer to a regular phone. So, you can make your phone calls over the Internet but use a regular telephone to do so. I've found the audio quality is higher than with products that require separate headphones and microphones. And picking up the phone is such a long-ingrained habit that there's really no learning curve here.
5. Trim television services. Hey, I love my cable, and millions of others love their satellite dishes. But if the times demanded, I would wave goodbye to a bundle of monthly cable charges. I'd also be in mourning during football season, but I'd survive. I've already installed a digital antenna, and it works well. I also subscribe to Netflix for less than $9 a month, and I can view all its offerings on my TV or computer.
6. Re-check insurance rates. Every year, I go online to find current rates for all my insurance coverages. More times than not, I find savings that are large enough to justify switching carriers. When you've had your auto, home, life, and other insurance policies in place for several years, it's easy to forget "creepage"—those annual bump-ups in premiums. They really add up after a while. And while constantly rising health insurance rates may make it seem like premiums can only move in an upward direction, that's not true. When you do shop around, you may also discover that your coverage needs have changed. If your cars are the same ones you had five years ago, for example, you probably don't need as much collision insurance as you once did.
7. Convert to natural gas. We spent years worrying if the heating oil truck would fill up our tanks before we ran out of fuel. Then we spent more years worrying about how to pay the bills when the oil did arrive. We're finally making the switch to natural gas, which is cheaper, doesn't require deliveries, and is domestically produced. The decision was made easier for us because our old oil furnace needed replacing anyway. But the savings could justify a switch even for newer heating systems.