Spend Less on Everything

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In today's economy, consumers are being squeezed at both ends: On one, by higher prices for staples like food and gas; on the other, by dropping interest rates on savings, disappointing stock-market performance, and meager or no salary increases. If you're having trouble keeping within your budget, this is a good time to review your spending to find ways to cut costs without denying yourself too many of life's pleasures.

We looked at ways to trim your spending in a number of areas. Read on for our favorite belt-tightening tips. For more money-saving measures from CR Experts, see Smart Moves for Tough Times.

Groceries

Food prices were up 4.6 percent overall between February 2007 and February 2008, with milk up 16.8 percent and eggs up a whopping 25.3 percent. You can save in the grocery aisle by purchasing store brands and stocking up when items you use regularly are on sale. But watch those use-by dates, and compare unit prices carefully. For some staples, such as canned tuna and ketchup, the smaller size often has a lower price per unit.

Don't let end-of-the-aisle promotions or free samples induce you to buy products you don't really want or need. And know what products typically cost -- some items being promoted might actually be full price. Coupons and supermarket loyalty cards can help you save. A survey conducted for Consumer Reports ShopSmart magazine found that shoppers who did saved an average of $678 a year, or more than 10 cents of every grocery dollar.

Avoid buying nonfood items like batteries, medicine, and cleaning products at the supermarket, where you'll probably pay more than at a discount store. Check prices at other types of retailers -- discounters like Wal-Mart and Target, warehouse clubs like Costco and Sam's Club, and even local convenience stores -- for the items you buy regularly. Plan your shopping so you can "store hop" in one trip. For example, one of our staffers found the lowest prices on cereal at Target, while a nearby gas-station mart beat other stores on milk and eggs. Check out a "limited assortment" supermarket if there's one near you, such as the national chain Aldi Foods and PriceRite in the Northeast.

Unless there's a problem with your local water supply, don't buy bottled water. It's more expensive than tap water, and the bottles are such a threat to the environment that some communities have banned the purchase of bottled water for their municipal offices or prohibit its sale at government-sponsored events.

Automotive

Drive smoothly and stay within the speed limit to squeeze more miles from the increasingly pricey gasoline you buy. Keep your tires properly inflated, and plan your outings to accomplish as many tasks as possible within a single trip. Don't idle the car for more than 30 seconds; shut it off instead.

Don't use premium fuel unless the car owner's manual says it's "required," not just "recommended," or if you hear engine pinging. Shop around for the lowest gasoline prices. One way to do that before leaving the house is to check www.fueleconomy.gov for a list of Web sites where motorists can report and check out the latest prices by location.

Find a trustworthy mechanic and get only the maintenance services recommended in your vehicle owner's manual. If you do some of the basics yourself -- such as filling your windshield washer reservoir or changing your wiper blades -- you can save even more.

If you're replacing your car, select one that's fuel-efficient and has a low overall cost of ownership. That doesn't necessarily mean the cheapest car out there. New-owner cost estimates for dozens of models are available to ConsumerReports.org subscribers. The data, based on our auto tests and reader surveys, take into account fuel efficiency, maintenance and repair costs, depreciation, interest on financing, sales tax, and insurance.

General merchandise

No matter what you're buying, first check out an online shopping "bot," a Web site that gathers prices from numerous retailers. Some popular ones are www.mysimon.com, www.nextag.com, and www.bizrate.com. Also do a basic Web search to find coupons and coupon codes. And find instant rebates or get cash back by shopping through Web sites such as www.fatwallet.com and www.ebates.com.

If you shop frequently at a few stores, find out if they offer discounts or other perks to customers who use their credit cards. Some retailers let you sign up to receive special offers by e-mail.

Check out department-store alternatives such as Marshalls and HomeGoods. You may also be able to save at outlet and dollar stores, though don't assume their prices are always lowest. Because of safety concerns, we don't recommend buying electrical items, medication, or children's products at dollar stores.

Utilities

During cold weather, lowering your thermostat setting by 10 degrees can cut your heating costs by as much as 20 percent. And if you can stand the heat, you can cut your summer cooling costs by at least 3 percent for every degree you raise the thermostat setting. As a guideline, keep the house at 68 degrees in the winter, and 50 to 60 degrees when you're asleep or away. In the summer, set the thermostat no lower than 72 degrees, and 80 to 85 degrees when no one's home. Save by installing a programmable thermostat.

Cut the cost of doing laundry by washing your clothes in cold water and, if possible, hanging them on a line to dry. If you use a dryer, remove the clothes while they're still damp (a dryer with a moisture sensor can help). Not only will you save on energy costs, but your clothes will be easier to iron and hold up better.

For cooking, use a microwave whenever possible -- it consumes about 20 percent of the energy required by a full-size oven. To save energy when cooking on the stove, pick the element or burner that's roughly the same size as the pot you're using.

Consumer Reports testing confirms that replacing standard incandescent lightbulbs with energy-efficient compact florescent bulbs can save you $5 a year per bulb, assuming that you use each bulb an average of three hours a day. And CFLs cost only $2 to $3 each, quite a drop from 1999, when they cost $9 to $25.

Phone, Internet, TV

Fierce competition among providers has made bundled packages, which include cable TV, Internet, and phone service, worth considering. Make sure you understand the fine print, including equipment rental charges and postpromotion pricing. With promotional rates of about $99 a month for the first year, you can save hundreds of dollars over buying the services separately. For more information, see our full report on bundled services, with Ratings for ConsumerReports.org subscribers.

If you make a lot of long-distance calls, research the possible benefits of an unlimited calling plan or consider switching to VoIP (Voice over Internet Protocol) service. If you make few long-distance calls, consider switching to a plan with per-call pricing. Alternative companies such as ECG and Everdial have low rates and time calls in six-second increments instead of the standard one-minute increment that most companies use. Make the most of wireless telephone-plan features like free evening or weekend long-distance calls. Cell-phone users who make few calls might save by switching to a prepaid service after the end of their contract. If you use your mobile phone for text messaging or e-mail, look into plans that bundle such services.

Personal finance

Make sure you're paying as little as possible in bank fees. In 2006, consumers forked over more than $36 billion in fees associated with checking and savings accounts, according to the U.S. Government Accountability Office. Consider that the average overdraft fee charged by large banks in 2007 was $28. If you're not careful with your debit card, you can easily rack up several of those fees before you realize it. Also avoid "foreign" ATM fees by withdrawing money using your own bank's ATM. If you can't get to one, use a credit or debit card for purchases. Choose your credit cards with care. You don't need to pay an annual fee, since there are many cards that don't charge one. You can make your card work for you if you get one that pays rewards, but only if you pay your balance in full each month. That's because rewards cards tend to carry higher interest rates. Review your card's program to make sure you're using the rewards before they expire. If not, switch to something more appropriate. For example, a card that pays an ongoing 2 percent rebate on certain purchases might be better for you than one that offers frequent-flyer miles you won't use. If you're carrying a credit-card balance, strive to pay it down quickly to cut your interest costs. In the meantime, ask the card issuer to lower your rates. You can always threaten to transfer the balance to another card. But check carefully before actually making such a transfer because the fees and postpromotion rates can be killers. Check our full report on credit cards, with Ratings for ConsumerReports.org subscribers. You can save money on your brokerage account by switching to a discount broker or even a free one, such as Zecco.com. In a May 2007 CR Money Lab survey of online brokers, the top-rated ones were Firstrade Securities, E-Trade Financial, TradeKing, and Charles Schwab.

Insurance

When buying insurance or renewing a policy, comparison shop at a site such as InsWeb. Ask about getting a multipolicy discount if you buy your auto, home, and life insurance from the same company. Raising your deductibles -- the amount you must spend before the insurance kicks in -- can save a lot, especially if they're less than $500 a year. For example, boosting your car insurance deductible to $1,000 from $250 could cut your premium by up to $677 annually. Review your policies to make sure you're not duplicating coverage. In the case of car insurance, there's no reason to buy separate roadside-assistance or towing coverage if you're already getting it as part of your vehicle warranty or from an auto club. And if you and your family have separate medical insurance, consider dropping your policy's medical payments coverage, unless your state requires it.

Health care

Switch to generic drugs, which are as effective and safe as their name-brand counterparts but can cost 20 to 50 percent less. If a generic is unavailable, there might be a less-expensive name-brand alternative. Go to Consumer Reports Best Buy Drugs for a list of generics and alternative name-brand drugs to discuss with your doctor. The site also offers free money-savings guides. If you must take a name-brand drug, ask your doctor if you can get higher dosage pills and split them. Some drug companies offer assistance to consumers who can't afford their medication. Prices on prescription drugs can vary widely, so it pays to comparison shop. A recent Consumers Union report found that by diligently shopping, senior citizens in Florida were able to find lower prices than those offered through their Medicare Part D drug plans. Big-box retailers such as Wal-Mart, Target, and Costco can offer deep discounts. Try to use hospitals, physicians, and other providers that participate in your health plan for the lowest out-of-pocket costs.
Copyright © 2006-2010 Consumers Union of U.S., Inc. No reproduction in whole or in part without written permission.

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