How to Save Money: The Definitive Guide – Part 1

budget2013-612x300We here at the Five Ten Twenty Club read way too many blog posts online about the “Top 5 Ways To Save You Money.” (The internet is full of them, and most are eye-catching but not particularly helpful.) While the posts contain a few good ideas from time to time, after a while, most of the ideas in the blogs just strike you as too weird and difficult.

We don’t think most people want to be extreme discounters, hand-making everything in their homes for example. We figure most folks just want some reasonable tips about how to spend less doing everyday things, so that they’ve got a little money to put toward their goals like paying off credit cards, putting aside money for a nice vacation or saving for their children’s schooling.

So, we’ve tried to put together a list that’s actually useful:

Where you live

Whether it involves rent or a mortgage and property taxes, your home is almost always your biggest expense. According to a 2013 study published by the National Housing Conference’s Center for Housing Policy, the median housing costs for a working renter or homeowner in the USA was $847 and $1,024 per month, respectively–or about 33% and 29% of their respective pre-tax incomes. Since this is likely your biggest monthly expense, any significant reductions you make in your housing costs can save you a lot of money.

Choosing where to live is always a complicated decision based on any variety of things like the number of rooms and amenities available in the home, the desirability of the neighborhood (for entertainment, safety, or access to public transportation or quality schools, for example) and the associated commute time to work. If you want to save significant amounts of money each month, you should prioritize affordability when you’re considering a home. Perhaps you don’t actually need so many rooms, such a nice building or such a nice kitchen. Maybe you’re open to having roommates that can help share in housing costs. Be open to downsizing and sharing to save money.

What You Drive

Your choice of transportation is likely to be your next biggest expense. According to the AAA, the average sedan costs about $760 to own and operate each month if you drive about 15,000 miles a year. Even if you keep your current car though, you can reduce that cost dramatically by driving less, because the less you drive, the less you’ll have to spend on gasoline and maintenance. Committing to drive less may even help you save money on your insurance, and it can be as easy as reducing your overall travel; carpooling or ride-sharing; riding a bicycle or walking; using public transportation; or renting a car for long distance trips (so that you reduce your maintenance costs and risk-of-accident for your own vehicle). These are all changes that are easy to make from time to time.

However, those other Top 5 lists are right that you may also want to consider not owning a car at all. This can actually be pretty easy to do in certain US cities. If my own job was near public transportation, I could take advantage of the subway and bus station near my apartment, sell off my car and then just borrow or rent a car whenever I need to drive outside the area. That need occurs seldom enough, so it could be a great financial decision with little additional hassle at the end of the day.

If that sounds daunting to you, consider that there are now more ways to rent vehicles than ever before. Traditional car rental companies like Enterprise have been diligent about expanding beyond the expected airport locations to neighborhoods through many major cities. Also, ride sharing companies like Lyft and Sidecar allow you to hitch a ride with people who are using these services’ smart phone apps to turn their private cars into temporary taxis, and car sharing companies like RelayRides are helping regular people to rent out their cars to their neighbors whenever they are not using them. (RelayRides even just expanded to offer service at airports.)

Stay Tuned for Part 2 next week

Well, that’s enough for today. While we might have seemed light on specific tips, we more want to encourage you to consider a broader range of options for your home and transportation than you might normally consider. And of course, you’ll need to find the most affordable solution that still works for you and any partner or children that may also be directly affected by any decision you make. But the simple point is that it’s easier to save big bucks by cutting down on your largest expenses. Sure, every dollar adds up – but when you’re talking major costs like housing or transportation, they add up faster. We’ll talk more about this in Part 2. Until then, keep fighting the frugal fight.

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