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Savings boot camp
Even the biggest spendthrifts can become savers if they're prepared to put on their game face.
Growing your bottom line

Savvy ways to save money

With home equity evaporating like dry ice on a hot day, many Americans no longer can rely on their homes as a source of quick cash. Likewise, credit card issuers are lowering credit limits for many consumers, imposing constraints on spending.

Americans are realizing that the spending party is over and it's time to build wealth the old-fashioned way -- by saving money.

Some obstacles stand in the way. For instance, real median household income grew a sloth-like 1.3 percent between 2006 and 2007, to $50,223, according to the U.S. Census Bureau. And it's not likely to accelerate much in 2008.

For the average budget-challenged family, the escalating cost of living can be discouraging. But saving money involves a clever combination of cutting expenses and allocating any savings into a bank or investment account before the money disappears.

The goal is doable with stalwart financial discipline.

The savings game plan
Get psyched and stick with it
Sometimes people get overwhelmed if they perceive that the savings goal is too large. They end up getting frustrated and give up. So it's important to keep yourself psyched.

Identify successes along the way, no matter how small. It's just as important to see the plus side of your balance sheets go up as it is to see your liabilities go down.

It'll go a long way toward maintaining a positive mental attitude and sticking with the game plan, says financial adviser Susan Zimmerman, co-founder of Mindful Asset Planning in Apple Valley, Minn., and author of "The Power in Your Money Personality: 8 Ways to Balance Your Urge to Splurge With Your Craving for Saving."

Zimmerman says savers shouldn't be afraid of opening the mail because they assume that every statement is going to be a bill.

"You need to see (your monthly statements) and watch them grow to be able to embrace what that's doing for you now and see that you have some positives in your financial life," she says.

"It's an absolute psychological benefit."

Debt and poor budgeting habits are like weight gain. They sneak up on you, and before you know it, you've got a problem that won't go away overnight.

Consumers need to stay focused and realize that it may take a few years before results from modifications to financial behavior are positive.

Financial happiness means not having to live paycheck-to-paycheck, says Steve Pomeranz, CFP, host of National Public Radio's "On the Money!" He adds it's important to have patience and a balanced strategy to get to the point where you can enjoy a solid financial cushion.

"Your attitude will really will change once you get some money in the bank and you get some breathing room," he says. "Unfortunately, it's not very sexy, but the tortoise wins the race over the hare in the long term."

  What's your experience with investing?
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-- Posted: Oct. 27, 2008
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