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13 ways to live a rich life on less

Can you remember life before $100 sneakers and $5 coffee, when people actually lived on what they earned and still had a little something socked away for a rainy day?

"People moan and groan about why they can't make do," says Michelle Singletary, author of "Seven Money Mantras for a Richer Life." "But if you look at your lifestyle, there's almost always a way to trim [costs] and make do with less."

Singletary and her four brothers and sisters were raised by their grandmother, who earned a low-income salary but owned her home and car and accumulated a nice savings and pension while providing well for her family.

Cutting costs was more than a handful of tips, says Singletary. "It was a way of life."

Her grandmother looked at potential purchases in terms of "what you could spend that money on that would put you in a position of not having to struggle," says Singletary. Like a fast-food meal out vs. allocating that money for the phone bill. "And I actually do that now myself," she says. "I ask, 'What are the consequences of spending this money?'"

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That approach, save automatically and spend selectively, is exactly what money experts and consumer advocates advise. To accomplish that, here are 13 strategies for living well on less:

1. Analyze your spending.
2. Make a budget.
3. Never pay retail.
4. Try store brands.
5. Buy used.
6. Pay cash.
7. Pick your credit card wisely.
8. Shop around for auto insurance.
9. Dial up phone savings.
10. Change your mortgage payment method.
11. Use family and community resources.
12. Pay yourself first.
13. Exercise restraint.

1. Analyze your spending.
Look closely at what you've spent for the last three to six months, says Ed Moore, CFP and president of Edelman Financial Services. "And look for spending [you] might regret." As you examine your expenditures, ask yourself, "What dollars satisfied a need, what dollars satisfied a want and which expenditures might not have satisfied either."

David Bach, author of "The Automatic Millionaire," says not to forget even your smallest purchases: Where do you spend small amounts of money on a daily basis? For many, it's something as seemingly insignificant as a few bucks for a cup of gourmet coffee, but it adds up. That doesn't mean you necessarily have to give up your java break. Bach says you do, however, need to change your thinking. Notice exactly now much you are spending and where.

2. Make a budget.
"Without exception you have to do a written plan, called a budget," says Dave Ramsey, author of "The Total Money Makeover." Listeners to his national call-in radio show tell him once they make a budget, "they feel like they got a raise." The reason, he says, is "managed money works harder."

But there's no one-size-fits-all budget. "It varies from month to month," Ramsey says. So sit down and plot how each dollar will be spent "on paper, on purpose before the month begins."

3. Never pay retail.
"Everything's negotiable," says Bach, who learned this money lesson from his grandmother. "Almost everywhere she went, she could talk the price down," he says. And that's still perfectly acceptable in many retail situations, he says.

Also know when to shop. For example, buy clothing in season. That's when the retailers consider it past the season and put it on sale, says Clark Howard, co-author of "Clark's Big Book of Bargains."

4. Try store brands.
"Everytime somebody goes to the supermarket, I want them to try one more store brand," says Howard, which he notes costs up to 40 percent less. "To get people to change everything isn't possible. But to get them to change one item at a time is less difficult."


-- Posted: July 19, 2004



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