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25 ways to save

There are many ways to cut corners and pinch pennies and not be destined to live a reduced-price life. Being cheap is a state of mind and a great way to turn your home economics around without denying yourself the simple pleasures of living. Hey, it's even cool.

Mary Hunt, founding editor of the Web site Cheapskate Monthly, defines the oft-maligned cheapskate as dignified.

"A cheapskate has a balanced, honest and dignified approach to money management. It's someone who doesn't spend more than they earn or let money and material possessions rule their thoughts and desires.

"A cheapskate does not buy on impulse," says Hunt.

Penny-pinchers use products and services resourcefully. This can range from timing a shower and having leftovers for lunch to washing and reusing disposable plastic bags.

Here are 25 great ways to release the cheapskate within you or to stop spending and start filling that cookie jar.

1. Air fares
The more flexible your travel plans, the more you'll save. Use the Internet to search for the cheapest tickets and buy them online. Travel on no-frills, discount airlines whenever possible. Cut costs even more by travelling on off-peak days such as Saturday and Tuesday through Thursday. Buy your tickets in advance.

2. Car rental
Shop around for the best basic rates. Inquire about additional charges such as gas, drop-off fees and extra-driver rates. Find special offers. Check with your insurance carrier and credit card company to avoid duplicating coverage you might already have.

3. New cars
If you can, buy the car with cash or make a large down payment. Get the lowest financing possible. To find the best rates offered in your area, check Bankrate's auto loan search engine.

Do your homework before negotiating on a vehicle. Research the vehicle's fuel efficiency and suggested retail price by checking new-car guides at Web sites such as CarQuotes.ca.

Comparison-shop and be sure to let the salesperson know you are doing so. Some fees can be negotiated, such as the "dealer prep" charge. Try to get the dealer to drop the fee. It's just more profit for the dealer.

4. Used cars
Before you buy a used car, always compare the seller's asking price with the average retail price in a car guide such as the Canadian Red Book.

Have a mechanic check the car, especially if it is sold as is. Buy from people you know and trust. They are more likely to sell at a lower price and point out any problems with the vehicle.

5. Auto leasing
Don't lease just because the payments are low. After all, in the end, you won't own the car. If you do decide to lease, know the fair market value of the car and then haggle price and terms with the dealer just as you would if you were buying.

Make sure you're clear on all the fees and terms, especially excess mileage penalties and "wear and tear" fees. Use Bankrate's auto lease payment calculator to determine how much this lease will really cost.

6. Gasoline
Keep your engine well-maintained and your tires at the proper pressure to save on fuel costs. Look for a gas station that supplies free air. Combine errands into a single trip and use the family's most fuel-efficient car when doing extensive driving.

Compare prices at different gas stations; pump the gas yourself; and use the lowest octane possible for your car. Check out Bankrate's gasoline price calculator to find out if you can save by driving to a cheaper gas station.

7. Auto insurance
Shop around as rates vary widely. Call at least four agencies. You can lower your rates by raising your deductibles on collision and comprehensive coverage to at least $500. If you have an old clunker, drop the coverage altogether.

8. Homeowner/renter insurance
Raise your deductibles. Always make sure you buy enough coverage to replace the house and its contents. Make sure your new policy is in effect before dropping an old one.

9. Life insurance
For insurance protection only, buy a term insurance policy. It's much less expensive than whole-life, universal-life or other policies that have an investment or savings component.

While you may be growing a cash reserve that you can borrow against or simply collect when the policy expires, the higher premiums you pay usually make this investment choice much more expensive than if you invest outside of your insurance provider.

10. Chequing
Select a free chequing account or one that has no minimum-balance requirement. If you can't find a bank with free chequing in your area, consider an online bank. Check with your bank to see if it will lower its chequing fees if you use direct deposit.

11. ATMs
Don't pay ATM fees. It's throwing away money. Always use your bank's ATM or get cash back from point-of-purchase sales at places such as at the grocery store. This strategy is particularly effective when travelling and eliminates the late-night drive in the rental car through unfamiliar territory searching for a network ATM.

12. Savings
Rather than stashing idle cash in low-yielding chequing or savings accounts, put your money in comparatively higher-interest-rate savings or money market accounts. Internet banks offer some of the best rates.

13. Credit cards
To eliminate all interest charges and fees, pay off your account each month. If you do carry a balance, switch to a card with a low interest rate. Bankrate can help you find the best deal on a card.

Limit yourself to two credit cards. Read your monthly billing statements carefully, making sure you pay on time and don't exceed your credit limit. Those penalty fees are onerous.

14. Mortgages
Your first house need not be your dream home. Lower your expectations -- start with a townhouse or condo. Just start building equity. Choose the shortest amortization period you can afford. The monthly payments will be higher, but you'll save thousands of dollars in interest charges over the life of the debt.

15. Mortgage refinancing
Consider refinancing your mortgage if you can get a rate at least 1 percent lower than your existing mortgage rate. But first, look at your current payment, figure the costs of refinancing and see how long it would take you to recoup the charges.

16. Home equity loans
Using home equity loans or lines of credit can be a cheap way for homeowners to consolidate expensive, high-interest debts such as credit cards. Use caution -- if you can't make the payments, you could lose your house.

17. Major appliances
Consult Consumer Reports for information about specific brands and how to evaluate them, including energy use. Once you find a brand you like, call a few stores and ask for the prices of specific models. After each store offers you a quote, find out if it is the lowest price they can offer. Haggle!

18. Energy
Make sure your appliances are energy efficient, especially air conditioners and furnaces. Get a home energy audit to find ways to save on heating and air conditioning. Some utility companies do the audit for free or for an affordable charge.

Try the new generation of compact fluorescent light bulbs. They use 70 percent less electricity and last up to 10 times longer than incandescent light bulbs. They screw into the same sockets and produce the same quality of light as incandescent bulbs.

19. Local telephone service
Get the cheapest plan possible. Get rid of optional services such as three-way calling and call waiting. Check the phone bill to see if you have any optional services that you really don't need or use.

20. Long distance phone costs
Long distance calls are cheaper if made in the evening or on weekends. Check rates with three or four companies to see which has the least expensive plan for the type of calls you make. Every few months shop again. Rates change regularly and if you often make calls outside your local area, you can save a lot. Or, buy a long distance phone card with rates of 3.5 to 5 cents per minute.

21. Groceries
Always shop with a list. Compare the unit prices on shelf labels. Stock up on items you regularly use during sales. Use coupons, but only for products you normally buy.

22. Prescription drugs
Ask for a generic equivalent; it's much cheaper. Pharmacy charges vary, so comparison shop regularly. Consider using a mail-order pharmacy, which often sells for a lower price.

23. Shopping
Start holiday shopping early and spread it out over a few months instead of a few days. Always send in for the rebate on a purchase, whether it's $2 or $50. It all adds up.

24. Review your benefits package
You may be paying for an overlap in coverage between your policy and your spouse's work plan. You may also be paying for life insurance coverage that is cheaper to get on your own, or which you don't need because of an existing policy you bought privately.

25. Entertainment
Go to matinees of first-run movies. You'll still get the big-screen experience but at a significant savings. Try a repertory theatre, a local film festival or even a drive-in. To really save, rent movies. Better yet, check out your local public library for free movies to borrow or work as a volunteer at a local fair or festival -- you'll get in free.

How about you? Are you proud to be a cheapskate? Making a difference in your budget by pinching a few pennies where it doesn't hurt too badly? If you'd like to share your tips and make a little cash too, enter our Frugal U contest. Each month the best tipster wins $100.

Jasmine Miller is a freelance writer in Toronto.

-- Posted: April 5, 2004
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