Does penny-pinching pay off?

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Saving more money -- like losing more weight -- should be easier than it is. After all, we know how to do it. But getting ourselves actually to do it. That's tough. So I've compiled a list of eight easy-to-do things that will pay off big for the next 12 months to come.  I'm Jean Chatzky, and this is Bankrate Bottom Line.

No. 1: Spend $20 on a programmable thermostat, then set it to keep your house at 68 degrees in the winter and 10 degrees lower when you're out of the house working or asleep. In summer, keep the house at 78 when you're home, warmer when you're away. Total savings: $180.

No. 2: Increase your insurance deductibles.  Boosting your auto and homeowners deductible from $250 to $1,000 can save you 25 percent on your policies. The average homeowners policy costs $978, the average auto policy $907. Total savings: $470.

No. 3: As Bill Murray told the groundhog: Don't drive angry.  Aggressive driving can lower your gas mileage by 33 percent on the highway and 5 percent around town. So cool it. The average driver uses about 600 gallons of fuel a year. At current prices, you'll save $420.

No. 4: Audit your communication bills. When it comes to your cellphone, cable, internet, etc. … there are so many new ways to save. You can scale back to basic cable and supplement with streaming. You can use a free texting app on your phone and not pay up for that. You can always remember to put on wi-fi and cut your minutes. Yearly savings: $500 and up.

No. 5: Use a refillable water bottle. The average consumer buys 167 bottles of water a year -- at a cost per bottle of $1.45.  Refill instead. Savings: $240.

No. 6: Make Thursday leftovers night. Americans waste $165 billion annually by tossing unwanted snacks and meals. Do the math, and your jaw will drop. Savings (per person in your family): $529.

No. 7: Bag it. Finally -- you knew it was coming. The average American spends more than $1,100 a year on coffee and potentially more (around $10 for every day you eat out) on lunch.  Bag it twice a week, drink the office coffee (or bring your own) twice a week, and save a whopping $1,479 a year.

No. 8: Adjust your withholding. The average tax refund runs around $3,000 year in and year out. Adjust your withholding so you get that money in your paycheck -- then save it. Savings: Up to $,000.

Then there's the all important last step: Move the money into savings automatically. The $5,000 is about $416 per month. Have the money swept out of checking and into savings electronically to make sure it happens.

In less than three years, Carrie Rocha and her husband, Marco, paid off $50,000 of nonmortgage debt and accumulated a six-month emergency fund and other savings by clipping coupons, buying store brands and reducing unnecessary expenses.

Rocha, of Maple Grove, Minn., says the couple realized they were spending more than they made and started cutting expenses across the board. But rather than tackle huge expenses, they started small.

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"For us, large lifestyle changes would have turned my husband off to the whole idea of saving money. We have been intentional to set aside a little, a little, a little, until it became a lot, a lot, a lot," says Rocha, who now blogs about her experience at

Thrift gurus long have espoused the wisdom of pinching pennies because of its potential to add up to big savings.

But do clipping coupons and just saying "no" to the daily $4 latte really make a difference in the long run? Or is it big stuff -- such as downsizing a house or getting rid of one car -- that really helps families save?

The answer depends on your circumstances, tolerance for doing without and self-discipline.

Pinching pennies reduces pain

Danny Kofke, author of "How to Survive (and Perhaps Thrive) on a Teacher's Salary," is a big believer that trimming small expenses can add up to big savings and better spending habits.

Kofke and his family of four in Hoschton, Ga., have been able to live exclusively on his $37,000 a year salary -- and save money -- by making adjustments to small expenditures, such as switching to cheaper cell phone plans, using the library instead of buying books and making their own coffee at home.

Saving money on little things has a snowball effect that can lead to better financial habits, he says. Once people cut down on a few things and see the positive financial impact, they are often motivated to cut back on the big stuff.

"Small steps are the best way to form habits that will stick," Kofke says.

Saving money is like losing weight, Kofke says. Trying to make drastic, wholesale changes can quickly become discouraging. However, if you cut back a little at a time, you'll have better success.

“Small steps are the best way to form habits that will stick.”

While he acknowledges that big expenses can pose outside risks to a person's financial stability, he contends that it's a mistake to overlook the power of trimming back on smaller spending.

"I know many people who got into trouble because they bought big-ticket items they could not afford," Kofke says. "But I think those smaller everyday purchases also played a major role in our country's economic problems.

"Little things do add up."

Big changes and bigger results

However, not everybody subscribes to the smaller-is-better approach.

"Pinching pennies is the most emotionally draining way to save," says Rebecca Schreiber, a Certified Financial Planner with Solid Ground Financial Planning of Silver Spring, Md.

What works better -- and faster -- is to downsize big expenditures in life. Schreiber says savers get a bigger bang for their frugal buck by moving out of a big house and into more modest digs, or selling a second car.

Jeff Yeager, author of "The Ultimate Cheapskate's Road Map to True Riches," agrees:

"Small savings, aka 'the latte factor,' are largely false economizing and have led many Americans into their current financial crisis," says Yeager, a full-time writer who previously worked for 25 years in Washington, D.C., managing nonprofit organizations.


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