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Savings tips for living below your means

  • Pay off credit cards or move balances to cards with lower interest rates.

  • Avoid using credit cards. If you want a new stereo or TV, wait until you have the money to buy it. Leave the credit cards for emergencies -- when the washing machine takes its last breath or the car breaks down.

  • Get that emergency fund started. That way you won't have to pay credit card interest when the washing machine dies.

  • When you get a raise, put 10, 25 or 50 percent aside for investing or paying off bills.

  • Shop around for the best deals and the best prices. Use the Internet to do this and you'll cover a lot of territory in a short amount of time.

  • Don't tie up too much money in your mortgage -- not more than 28 percent of your gross monthly income. All debts -- mortgage, car payments, credit cards, etc. -- shouldn't take more than 36 percent of your gross monthly income. Reduce those percentages if you can. Just because the bank will give you a mortgage that's 28 percent of your monthly gross doesn't mean you can't take out a smaller mortgage that will let you keep a little more cash each month.

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  • Don't worry about keeping up with your neighbors. The only reason you should buy something is because you want it -- not to impress someone else.

  • Look at your daily lifestyle and see where you can cut costs. Clip coupons, and don't forget to take them to the store. It's absurd to pay full price for something when you don't have to. Eat out a little less often. Pack a lunch for work a couple times a week.

  • Check out Bankrate.com rates listings to find the best rates on mortgages, car loans, personal loans, CDs, checking and money market accounts -- get the most for your money.

How about you? Are you managing to live below your means and save the difference? If so, why? Do you have a secret weapon for saving that you'd like to share? Send it to editors@Bankrate.com and we'll spread the news to the rest of our readers. Keep saving!

-- Updated: April 27, 2001


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