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Consumer Watch: Little changes help you lay away serious loot

A savings cushion can start with passing up that latte

Mar. 6, 2011 - 05:26PM   |   Last Updated: Mar. 6, 2011 - 05:26PM  |  
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RESOURCES

http://www.militarysaves.org and http://www.americasaves.org: National efforts to help you assess your savings, track your progress and take action to save.
http://www.saveandinvest.org: Includes a savings calculator, retirement calculator and other resources for military families, by the Financial Industry Regulatory Authority.
http://www.choosetosave.org: Maintained by the American Savings Education Council and the Employee Benefit Research Institute.

Saving money starts with little things — and enough little things add up to big things. Imagine having a cushion of $1,200 in the bank by making one small change to your daily routine.

Never underestimate the peace of mind and sense of freedom that come with having a financial cushion. It's far better than worrying about where the money will come from to pay the next bill. What would happen if you had an unexpected expense, such as a major car repair?

Military families' lives are unique, revolving around deployments and moving. If you have a savings cushion, your family won't experience as much financial stress if, for example, one spouse must give up a job because of a move to a new duty station. And if you haven't built up a lot of debt while the spouse is working, all the better.

Mind you, a $1,200 cushion is only the beginning. But it's doable. Keep saving. Build up a bigger cushion of emergency funds — aim for at least six months' worth of expenses in an accessible, federally insured checking or savings account.

That cushion can save you money. Instead of charging a car repair on your credit card, you could pay for it immediately. Credit card interest rates are averaging about 14 percent per year — $140 a year on a $1,000 debt.

Instead of putting your vacation on a credit card, save up for it in a separate account. Think of it as one more way to look forward to your getaway — instead of regretting it for months or years as you struggle to pay for food, lodging and entertainment that's long forgotten.

A few more ideas to help you scrounge up an extra $1,000 or more in a year:

1. Skip the expensive coffee

If you saved the $5 a day you spend on java shop coffee, you'd save $100 a month.

• Estimated savings: $1,200 a year.

2. Save coins

At the end of each day, put your coins into a jar, and deposit the coins monthly into your savings. Some banks and credit unions have coin machines that allow you to deposit coins directly into your account for free. If not, roll your coins for deposit.

• Estimated savings: $30 a month.

3. Clip coupons

Use coupons from newspapers and other sources — but only for items that you need and use. After each shopping trip, take an amount of money equal to what you saved and put it in your coin jar. For links to Internet coupon sources, visit www.commissaries.com, click on "Links," then "Coupons."

• Estimated savings: $40 a month for a family of four; $20 a month for singles.

4. Bag your lunch

It's cheaper, and chances are it will be healthier.

• Estimated savings: $100 a month.

5. Avoid ATM fees

Use only ATMs within your bank's network and pass up fees of $3 or more per transaction.

• Estimated savings: $12 a month.

6. Raise your deductibles

You could save several hundred dollars a year by increasing your insurance deductibles. Increasing your auto insurance deductible from $200 to $500 could lower your costs by up to 30 percent, according to the Insurance Information Institute.

But before choosing a higher deductible, make sure you have enough money to cover that increased deductible if you have an accident or otherwise need to make a claim. That means you'll have to pay $500 toward any costs of the claim.

Put that savings in your emergency fund. If you can avoid claims, it helps avoid increases in the cost of your insurance premiums.

• Estimated savings: Up to 30 percent of your insurance bill annually.

Not only does saving money help you deal with life's setbacks, it will start to give you more options — think piano lessons for your child or the ability for you or your spouse to change careers or go to school.

Want to retire early? Start by giving up that $5 cup of coffee.

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