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How can I save when I'm almost broke?

Dear Money Matters,
By the time all of the bills are paid for the month, I am lucky to have $200 left. How can I save and perhaps invest?

Dear Stacy,
Without knowing more about the particulars of your situation, I can't offer specific advice on how you can free up money for saving and investing. However, I can provide a few global ideas that you can pick and choose from according to what fits:

Housing: If you own a home and have a mortgage that's, say, more than a year old, look into refinancing. Interest rates are at historic lows -- that alone may save substantial money from one month to the next. If you rent, consider moving to a less expensive apartment or home or give some thought to taking in a roommate. Either option can serve up significant savings.

Automotive: Likewise, check out to see if refinancing an existing auto loan might save you some cash. (I did an earlier column on this topic. If you drive to work in a metropolitan area, look into car pooling or public transportation (the latter can save big on gas and parking). To save on your auto insurance, give some thought to raising your deductibles. If you drive an old clunker, don't spend the extra cash on collision coverage.

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Telephone costs: Shop around to see which carrier might save you the most money. As most cell phone plans offer free long distance within the United States and free nights and weekends, be sure to take advantage of those perks. Don't call out of state on your home phone if you can do it for free on your cell.

Food: Provided you have the storage space, buying food and other things from bulk warehouses such as Sam's Club and Costco can offer significant savings. If you don't have enough room to accommodate bale-sized packages of toilet paper, ask a friend or neighbor to chip in for what you buy. But unless you have a large, ravenous family, stay away from perishables, as they may go bad before you have a chance to chow.

Credit card debt: If you're dropping a lot of money on one or more high interest credit cards, check out consolidating them into a single lower rate card. If you feel it's possible, go with a teaser rate card that has an exceedingly low interest rate (but only for a specified amount of time). My colleague Don Taylor wrote a piece on consolidating credit card debt. Use Bankrate's credit card search engine to find the best card for you.

Pay yourself first: Perhaps an old cliche, but one that got there by containing more than a grain of truth. Rather than doling out money to everyone else and praying that even the slightest crumb is left over, make saving or investing the first "bill" you pay every month. You may be pleasantly surprised how easily you can make ends meet thereafter.

Automate payments: To help earmark funds for saving or investing in the least painful fashion, set up an automatic withdrawal program where you bank. That way, an amount you specify is withdrawn from your checking account on a regular basis and invested as you direct. It can be a whole lot easier than steeling yourself to write a check every month.

Put the pieces together: Far too many of us look for a savings grand slam -- that one coup that will free up all the money we need. Instead, look to save more modest sums on a number of fronts -- once they're all added up, a few dollars here and there may turn out to be more money than you ever dreamed possible.

Bankrate has a channel devoted to tips for saving money, called Frugal $ense . One feature you should check out is the monthly money-savings tips contest. Read through the dozens of money-saving tips from the finalists -- and maybe you can win $100 by contributing one of your own.

Good luck.


-- Updated: July 14, 2008
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2004 Debt Guide
30 yr fixed mtg 3.60%
15 yr fixed mtg 2.73%
5/1 jumbo ARM 3.14%
See Also
Calculate your payment on any loan
How much house can you afford?
Can you borrow from your home equity?

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