Balance budget with big savings

December 30, 2007|By Harriet Johnson Brackey | Harriet Johnson Brackey,South Florida Sun-Sentinel

How many times have you heard that if you just cut out those lattes, you could eliminate your budget problems?

That's basically bunk. In these times, small cutbacks, such as pouring your own cup of coffee rather than buying one, aren't going to take you where you want to go with your money.

The latte strategy does have one thing to recommend it: If your budget is so tight that not spending $2 or $4 a day will make a world of difference, it's an indication that you have much bigger issues than the price of coffee.

So tackle the real budget busters. Here are some savings ideas, based on the Survey of Consumer Expenditures for 2006, released in October by the Bureau of Labor Statistics:

Meals out

Last year the average U.S. household spent almost half of its food budget on meals eaten away from home, according to the survey.

But fast food eaten away from home often results from poor planning. If you planned ahead, you'd spend less and eat better.

Save your dining-out money for those times you can go to places you truly enjoy, rather than cheap meals grabbed on the run.

Too much car or truck

Transportation is one of the largest household expenditures, the survey data show. Of course, many people can't live without a reliable car. But in times of financial duress, you've got to consider: The average sales price of a used car was $15,518 last year, compared with $28,451 for a new car, according to the National Automobile Dealers Association.

That might change in the near future. Used cars may not be so much cheaper by comparison, if the economy deteriorates. The auto reports show that demand for used cars is growing, and dealers today make a much greater profit on a used car than a new one. So they will be happy to sell you one, but watch out for the price.

Too little budget management

It's worthwhile to put the time in to examine and attack all of your fixed costs. Is your credit card interest as low as it could be? Have you whittled down the phone, Internet or cable bills by comparison shopping?

An interesting fact: The average household last year spent about as much on cell phone service as it did on its land line. And the richer the household, the more it spends on the cell.

That's not the way it was a few years ago. New "necessities," it seems, are created all the time.

Take a look back: In 1960, food, clothing and housing took up 79 percent of spending. There just wasn't room for much else.

In 1984, clothing was knocked off that list, and the cost of transportation became one of the big three household expenditures.

If you can make your own list of necessities, without help from anyone marketing anything, you might be able to focus on whether your money is going where you want it to go.

yourmoney@tribune.com

Harriet Johnson Brackey writes for the South Florida Sun-Sentinel.

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