Four Ways to Trim Financial Fat


With the economy and the stock market acting wilder than a Category 5 hurricane, many of us are feeling the pinch in our pocketbooks. We're often asked, "how can I cut back and save some money?" Below are four of our favorite ways to help plump up your pocketbook, and trim any excess expenses.

1. No BLT's. In the Weight Watchers program they have a saying, no "BLTs?" and they don't mean the sandwich. That stands for "bites, licks, and tastes." If you have trouble saving, you need to check to see what kind of BLTs are in your wallet. The first thing you need to do is write down everything you spend money on for one month. At the end of the month take out a yellow highlighter and highlight everything that brought you great joy. Now look at what's left. Chances are you'll find something you can easily cut out that won't reduce your joy. For instance, drinks out with people you don't even like or subscriptions to magazines or newspapers you don't read.

2. Ask yourself, "How bad do I want it?" Millions of Americans struggle to save because they lack a tool to help them when those hot shoes or cool new earrings jump of the shelf and yell "buy me now!" Here's what you do. Step 1: Calculate your after-tax income. So if you make $40,000 a year and have a 25 percent effective tax rate you take home $30,000 a year. Assuming you work 2,000 a year that's an after-tax hourly income of $15. Step 2: The next time you see a $150 "whatever" that you just have to get, ask yourself, "How bad do I want it?" Then figure how many hours you have to work to pay for that item. In this case, is that $150 item really worth 10 hours at the office for $15 an hour?

3. Make saving a family project. Parents often find it easier to talk to their kids about the bird and the bees than about money. It's never too early to teach your children about the value of a dollar. So if you've decided you spend $100 on groceries or $100 on the weekend's entertainment, make it a family project to decide together how that money will be spent. You'll be amazed how your kids will get into this if you position it as a positive way for your household to figure out how to maximize your happiness. And you'll teach your kids a great life skill.4. Sell your stuff. Most of us have way more things than we need. By weeding out your clutter and either selling it online, or at a local resale shop or garage sale, you'll grow some green and reduce the mental clutter and stress that inevitable comes along with too much stuff.  Many people end up feeling like they have more when they clear out the clutter.

5. Watch out for The Joneses. If you've ever wondered how your friends and neighbors can do all that they are doing -- the house, the car, the vacations, etc. the odds are very high that they can't. More than 70 percent of Americans live paycheck to paycheck and that cuts across income spectrums. I've met people who can save on incomes of $30,000 a year and people who don't have a penny in savings on salaries of $300,000 a year. The harsh truth is most Americans don't live within their means. But after reading this column -- you know better and now know how to save money.

For more advice on saving, visit's Finance channel.

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